Suppose that the equilibrium price of an article is N5.00 but the government fixes the price by law at N4.00, the supply will be
- The same as equilibrium supply
- Greater than equilibrium supply
-
Less than the equilibrium supply
- Determined later by government
- None of these
The correct answer is: C
Explanation
If the market price is below the equilibrium price, quantity supplied is less than quantity demanded, creating a shortage. The market is not clear. It is in shortage. Market price will rise because of this shortage.