Which of the following statements about a binding price ceiling is true ?
Correct answer: D. The shortage created by the price ceiling is greater in the long run than in the short run
- A. The shortage created by the price ceiling is greater in the short ran than in the long run.
- B. The surplus created by the price ceiling is greater in the short run than in the long run
- C. The surplus created by the price ceiling is greater in the long run than in the short run
- D. The shortage created by the price ceiling is greater in the long run than in the short run
Explanation
A binding ceiling creates a shortage, and both demand and supply generally become more responsive over time. Therefore, the shortage is greater in the long run than in the short run.
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