During a cold winter, there is a natural-gas shortage. The government sets a price ceiling on natural gas so that people can continue to afford heating. If the price ceiling remains in effect, what will happen? Quantity demanded will exceed the quantity supplied. Quantity demanded will equal the quantity supplied. Quantity demanded and supplied will reach price equilibrium. Quantity demanded will be lower than the quantity supplied.

When the price ceiling is in effect by the government, then it leads to exaggeration of quantity demanded with respect to quantity supplied.

Option A is the correct answer.

What is the price ceiling?

A price ceiling is a situation where a maximum or higher price has been set to sell the goods or services in the consumer market.

The strategy of price ceilings is to set the price lower than the equilibrium price level. The quantity being demanded by the customers becomes higher than the quantity being sold by the suppliers when the price ceiling is exercised by the government. This ultimately resulted in a lack of supply or demand.

Therefore, the demanded quantity of goods becomes more than the supplied quantity if the price ceiling is still in effect.

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