If the Market Price of Green Tea Is $20

Multiple Choice

If the market price of green tea is $20.00 per pound and the government will not allow green tea growers to charge more than $25.00 per pound of green tea, which of the following will happen?

A) Demand must eventually decrease so that the market will come into equilibrium at a price of $17.50.
B) There will be a shortage of green tea.
C) Supply must eventually increase so that the market will come into equilibrium at a price of $17.50.
D) The price ceiling will be ineffective and the market will remain in equilibrium.