When the actual price in a market is below the equilibrium price, you have excess demand (also known as a shortage). In this situation, the quantity demanded exceeds the quantity supplied at the current price. However, among the options you provided, the best choice is a price ceiling, which is a limit on how high a price can go. A price ceiling set below the equilibrium price results in a situation where the demand exceeds supply, leading to a shortage or excess demand.
To clarify the other terms:
- Excess supply occurs when the actual price is above the equilibrium price, leading to more supply than demand.
- Equilibrium refers to the point where the quantity demanded equals the quantity supplied.
- A price floor is a minimum price set above equilibrium, leading to excess supply.
So in your context, the best answer is a price ceiling.
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