The following will occur when maximum price is fixed below the free market price EXCEPT that
- black market will be encouraged
- excess demand will occur
-
excess supply will occur
- rationing of commodities will occur
The correct answer is: C
Explanation
Maximum price is fixed above the equilibrium price to protect the consumers or the buyers. When the price is fixed below the equilibrium price, there will be excess demand over supply and it will lead to:
- rationing
- hoarding
- black market
- bribery and corruption