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When the Government Establishes a Price Ceiling Below the Equilibrium

Question 97

Multiple Choice

When the government establishes a price ceiling below the equilibrium price:


A) there will be a temporary shortage that market forces will eventually clear.
B) a shortage will occur that market forces will not be able to clear.
C) producers will eliminate the resulting shortage by jointly deciding to increase supply.
D) the market equilibrium price will prevail.

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