Governments often implement price ceilings to protect consumers from the high prices of essential goods and se

Question

Governments often implement price ceilings to protect consumers from the high prices of essential goods and services that frequently follow natural disasters. One unfortunate side effect of these price ceilings is that they will likely _____.(1 point)

lead to a surplus as prices are kept from falling to their equilibrium level

lead to a shortage as prices are kept from falling to their equilibrium level

lead to a shortage as prices are kept from rising to their equilibrium level

lead to a surplus as prices are kept from rising to their equilibrium level

GPT-5 mini · Answer

lead to a shortage as prices are kept from rising to their equilibrium level

Explanation: A binding price ceiling (set below the market equilibrium) prevents price from rising to the equilibrium level, so quantity demanded exceeds quantity supplied, creating a shortage.

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