Final answer:
A binding price ceiling restricts price from increasing, resulting in a shortage when quantity demanded exceeds quantity supplied.
Step-by-step explanation:
With a binding price ceiling, the price is not allowed to increase to allocate the available supply. When the market price is prevented from rising to the equilibrium level, a situation is created where the quantity demanded exceeds the quantity supplied, leading to a shortage. Price ceilings, like rent control measures, are typically enacted to keep essential goods and services affordable; however, they can lead to unintended consequences such as shortages and reduced quality, as suppliers cannot cover the costs of production or have little incentive to improve or maintain product quality.