2. True or false? Explain your answer. A price ceiling below the equilibrium price of an otherwise efficient market does the following:
Increases quantity supplied
False. By lowering the price that producers receive, a price ceiling leads to a decrease in the quantity supplied.
Makes some people who want to consume the good worse off
True. A price ceiling leads to a lower quantity supplied than in an efficient, unregulated market. As a result, some people who would have been willing to pay the market price, and so would have gotten the good in an unregulated market, are unable to obtain it when a price ceiling is imposed.
Makes all producers worse off
True. Those producers who still sell the product now receive less for it and are therefore worse off. Other producers will no longer find it worthwhile to sell the product at all and so will also be made worse off.