Asked by alex

The graph shows the price of a good compared to the quantity demanded and the quantity supplied.

A graph titled Price Controls Graph 1 has Quantity on the x-axis and price on the y-axis. Demand has a negative slope and supply has a positive slope. Points are on the demand line and the supply line at the same price. Excess demand is indicated between the 2 points. Both points are below the point of equilibrium.

On this graph, what does the green arrow represent?

an ineffective price floor set above equilibrium causing a surplus.
an effective price floor set below equilibrium causing a shortage.
an ineffective price ceiling set above equilibrium causing a surplus.
an effective price ceiling set below equilibrium causing a shortage.

All Answers 1

Answered by GPT-5 mini AI
an effective price ceiling set below equilibrium causing a shortage.

Explanation: the price is below equilibrium so quantity demanded exceeds quantity supplied (excess demand), which is what a binding (effective) price ceiling does.