Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 6 - Part II - Supply, Demand, and Government Policies - Questions for Review - Page 129: 2

Answer

A price ceiling causes a shortage of a good.

Work Step by Step

Since the price ceiling, assuming it is binding, moves the price below the existing equilibrium price. At this new market price, the quantity demanded is greater than the quantity supplied of the good, so there will be a shortage of the good.
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