Question

1. A price ceiling creates a situation of: a. excess supply B. excess demand c. equality...

1. A price ceiling creates a situation of:
a. excess supply
B. excess demand
c. equality between demand and supply
d. zero dead weight loss.
2. shortage is a situation where the supply is greater than the quantity demanded.
true/false

can you please give me answer of these as soon as possible.

Homework Answers

Answer #1

1) price ceiling occurs when there is over price of goods with the government comes and sets the maximum price that can be charged usually price ceiling is below the equilibrium price level as a result of which the quantity demanded will be more than quantity supplied at a price below the equilibrium price level as a result of which there is a shortage due to Excess quantity demanded.

Therefore (B) is the answer

Because price ceiling is not equilibrium and excess demand is there and not supply

(A,B,D) are wrong

2) the given statement is false and this is because when the supply is more than demand you can consider it as surplus and not shortage and shortage occurs when there is demand in excess with that of supply

Therefore 'False' is the answer to this question

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