Economics · Market Equilibrium and Price Controls
When the government imposes a binding price ceiling on a commodity below its equilibrium price, it leads to which of the following outcomes?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1There will be an excess supply in the market.
- 2There will be an excess demand (shortage) in the market.✓
- 3Producer surplus will significantly increase.
- 4Market forces will immediately restore the initial equilibrium.
Correct answer
There will be an excess demand (shortage) in the market.
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