An effective ceiling price will:A) induce new firms to enter the industry.B) result in a product surplus.C) result in a product shortage.D) clear the market.

Question

An effective ceiling price will:A)  induce new firms to enter the industry.B)  result in a product surplus.C)  result in a product shortage.D)  clear the market.

alana petty · Accepted Answer

Final Answer : C, Explanation :  A ceiling price is a maximum price set by the government or another authority above which a particular good or service cannot be sold, and it is usually intended to keep prices low for consumers. However, if the ceiling price is set at a level below the equilibrium price, it will cause a shortage because suppliers will not be willing to produce and sell as much of the good/service at the lower price. Therefore, option C is the correct answer as it correctly identifies the outcome of an effective ceiling price, which is a product shortage.

An effective ceiling price will:

A) induce new firms to enter the industry.
B) result in a product surplus.
C) result in a product shortage.
D) clear the market.

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