Final answer:
A price ceiling does not shift the demand or supply curves; it sets a maximum price for goods, potentially causing a shortage if below equilibrium. Similarly, a price floor does not shift the curves either, but sets a minimum price that can create a surplus if above equilibrium. These regulations impact quantity demanded and supplied rather than the position of the curves on a graph.
Step-by-step explanation:
Determining the Effect of a Price Ceiling on Market Equilibrium
The question asks about the impact of a price ceiling on demand or supply. A price ceiling is a regulation that sets the maximum price that can be charged for a good or service. It is intended to protect consumers from prices that are deemed too high. The correct answer to the question is 'd. neither' because a price ceiling does not shift the demand or supply curve. Instead, it imposes a constraint on the price that can influence the quantity demanded and quantity supplied leading to a shortage if the ceiling is below the equilibrium price.
In the case of a price floor, which sets a minimum price above the equilibrium, the correct answer is also 'd. neither' as the price floor itself does not shift the demand or supply curves, but rather causes a surplus if the floor is above the equilibrium price.
To illustrate this, consider a demand and supply diagram where the demand curve slopes downwards and the supply curve slopes upwards, intersecting at the equilibrium price and quantity. When a price ceiling is set below the equilibrium price, it creates a shortage as the quantity demanded exceeds the quantity supplied at that price. Conversely, a price floor set above the equilibrium price creates a surplus, with the quantity supplied exceeding the quantity demanded at that price point.