Question

Suppose the equilibrium price of oranges is $0.79, but government takes steps to prevent the price from exceeding $0.60. The likely result will be a: A. lower equilibrium price for oranges as the supply curve for oranges shifts to the right. B. higher equilibrium price for oranges as the demand curve for oranges shifts to the right. C. shortage of oranges as the price ceiling keeps the market from reaching equilibrium. D. surplus of oranges as the price ceiling keeps the market from reaching equilibrium.

Answer 1

Answer:

. C. shortage of oranges as the price ceiling keeps the market from reaching equilibrium

Explanation:

A price ceiling is when the government or an agency of the government sets the maximum price for a good or service.

The price ceiling is less than the equilibrium price. consumers would increase demand because the good is cheaper while producers would reduce supply as a result of the fall in price. As a result, demand would increase and supply would fall as pece is less than equilibrium price. These would lead to a shortage.

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