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)

Question

Responses

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

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

Answer 1

The correct response is:

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

Price ceilings prevent prices from increasing to their equilibrium level, which can result in higher demand for the product at the lower price, but a lower quantity supplied, ultimately leading to a shortage.