Question

A price ceiling is characterized by:

A. a price set below the current (or equilibrium) market price of the good.

B. a price set above the current (or equilibrium) market price of the good.

C. a shift of the demand curve (function).

D. a shift of the supply curve.

E. None of the above

Answer 1

A price ceiling is characterized by a price set below the current (or equilibrium) market price of the good. It leads to a shortage or excess demand.

Step-by-step explanation:

A price ceiling is characterized by a price set below the current (or equilibrium) market price of the good. It is a legal maximum price that can be charged for a product or service. When a price ceiling is set below the equilibrium price, it leads to a shortage or excess demand because the quantity demanded is greater than the quantity supplied.