Final answer:
The demand curve is both a representation of demand and marginal benefit. A price ceiling does not shift the demand or supply curve but causes a market disequilibrium when set below the market equilibrium price. Hence, the correct answer is option (B).
Step-by-step explanation:
The demand curve in economics is both a representation of quantity demanded of a good or service at various prices and a marginal benefit curve because it shows the highest price consumers are willing to pay for each additional unit, which is equivalent to the marginal benefit they derive from that unit. When discussing price ceilings, such a regulation does not shift the demand curve; rather, it sets a legal maximum price that can be charged for a good. As a result, a price ceiling will usually cause a shortage if it is set below the equilibrium price, leading to an excess of quantity demanded over quantity supplied.
A price ceiling does not shift either the supply or demand curve. Instead, it creates a market disequilibrium where the quantity demanded exceeds the quantity supplied when the ceiling is below the market equilibrium. It's important to remember that the supply curve is informed by firms' decisions based on their marginal costs, whereas the demand curve reflects the perceived benefits by individuals aiming to maximize their utility. If there were no externalities, private costs and benefits would align with social costs and benefits.