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will a surplus or a shortage caused by a price control become smaller or larger over...

will a surplus or a shortage caused by a price control become smaller or larger over time explain

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Answer #1

It has been observed that the price controls introduced by the government in the form of price ceiling and price floor might lead to surplus or shortage for a small period of time but not for a long period of time. This is because apart form creating surplus and shortage these controls introduced by the government lead to many more problems in the market as it interferes with the free functioning of the market like creating black market in case of price ceiling, in case of price floor it leads to lack of quality in rented houses etc. Thus, it has been observed that price floor and price ceiling lead to surplus or shortage at least for the time being but not longer period of time.

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