In a Competitive Market, a Legal Price Ceiling Set Above

Multiple Choice

In a competitive market, a legal price ceiling set above the free- market equilibrium price will result in

A) the quantity demanded exceeding quantity supplied and thus a shortage in the market.
B) a new free- market equilibrium at a higher price and lower output level.
C) increased profits to the firms in the industry.
D) a continuation of the free- market equilibrium price and quantity.
E) the quantity supplied exceeding quantity demanded and thus a surplus in the market.