Final answer:
When price ceilings are in effect, firms have a strong incentive to work around the laws.
Step-by-step explanation:
When price ceilings are in effect, firms have a strong incentive to work around the laws. Even though it is illegal in many parts of the world for firms to set prices and carve up a market, the temptation to earn higher profits makes it extremely tempting to defy the law. The demand and supply model shows how people and firms will react to the incentives that these laws provide to control prices, in ways that will often lead to undesirable consequences.