Which of the following would NOT result from a price ceiling set below the equilibrium price?

• A. Non-price rationing mechanisms
• B. A shortage of the good
• C. The emergence of black markets
• D. A surplus of the good

Answer: (D)

Verified step by step guidance

1. Step 1: Understand what a price ceiling is — it is a legal maximum price set by the government below the market equilibrium price, intended to make goods more affordable.
2. Step 2: Recall that when a price ceiling is set below equilibrium, the quantity demanded exceeds the quantity supplied, leading to a shortage of the good.
3. Step 3: Recognize that because of the shortage, non-price rationing mechanisms (such as long lines or favoritism) often emerge to allocate the limited supply.
4. Step 4: Understand that black markets may develop as sellers try to circumvent the price ceiling to sell at higher prices, responding to excess demand.
5. Step 5: Note that a surplus of the good would not occur under a price ceiling below equilibrium because the price is too low to encourage excess supply; instead, a surplus happens when prices are set above equilibrium.