If the price ceiling is set below the equilibrium price, what is the expected market outcome?

When a price ceiling is set below the equilibrium price, it usually leads to a shortage of goods in the market. The equilibrium price is the point where the quantity of goods supplied equals the quantity demanded. If the price ceiling is lower than this equilibrium price, it means that sellers cannot charge as much as the market would typically dictate.

As a result, at the lower price, the quantity demanded by consumers increases because the goods appear more affordable. Simultaneously, the quantity that suppliers are willing to provide decreases since they may find it less profitable to sell at this ceiling price. This discrepancy creates a scenario where the demand for goods exceeds the supply, leading to a shortage. Customers may find it difficult to purchase the goods they want, and producers might struggle to meet the higher demand at the artificially low price set by the ceiling. Hence, a shortage is the expected market outcome in this situation.