Why Do Shortages Develop Under a Binding Price Ceiling

question 126

Multiple Choice

Why do shortages develop under a binding price ceiling?

• A) It encourages sellers to produce more of the product.
• B) It encourages buyers to purchase less of the product.
• C) It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
• D) It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market.
• E) It encourages sellers to increase the quality of the products they sell,which in turn increases the quantity demanded.

---

Definitions:

Married

A legally or formally recognized union of two people as partners in a personal relationship.

Living Apart Together

Living apart together describes a relationship model in which a committed couple decides to maintain separate residences while continuing to identify as a couple and maintain their intimate relationship.

Singlehood

Describes the state of being unmarried or not involved in a romantic relationship.

Cohabitation

The living arrangement in which an unmarried couple lives together in a long-term relationship that resembles a marriage.