what is the economic effect of price ceilings?\na. an effective price ceiling will lead to a shortage.\nb…
what is the economic effect of price ceilings?\na. an effective price ceiling will lead to a shortage.\nb. resources will be allocated efficiently.\nc. an effective price ceiling will lead to a surplus.\nd. there are no economic effects.
Answer
Brief Explanations:
A price - ceiling is a legal maximum price. When it is set below the equilibrium price, quantity demanded exceeds quantity supplied, leading to a shortage. Resources are not allocated efficiently as the market is not in equilibrium. A surplus occurs when quantity supplied exceeds quantity demanded, which is not the case with an effective price - ceiling. And price - ceilings clearly have economic effects.
Answer:
A. An effective price ceiling will lead to a shortage.