3933EconomicsMedium
Which of the following statements is true if the government places a price ceiling on petrol at Rs150 per litre and the equilibrium price is Rs100 per litre?
AThere will be surplus of petrol
BA significant increase in the supply for petrol could cause the price ceiling to become a binding constraint.
CA significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.
DThere will be a shortage of petrol
Correct answer
C. A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.
Explanation
The correct answer is A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint..