Answer :
Final answer:
A price ceiling lower than the equilibrium price results in a market shortage and changes in consumer and producer surplus. Consumers who would pay more are unable to, and producers make less per product sold.
Explanation:
When a price ceiling of $150 is imposed on the market for solar panels, the equilibrium price, originally at $200 per panel, becomes unattainable. The price ceiling prevents sellers from charging a price above $150, leading to an increase in demand because the panels are cheaper, but a decrease in supply because producers are less willing to produce at this lower price.
The result is a shortage in the market because the quantity demanded exceeds the quantity supplied. Consumer surplus shifts as some consumers who are willing to pay higher prices no longer can acquire the panels. The producer surplus also decreases because sellers receive less money for each panel sold.
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In this situation, there will be a shortage of product.
What is Economics?
It is defined as a science that studies the analysis of resources, such as natural and monetary resources, in order to create wealth, consumption of goods and services, to meet human needs.
If the equilibrium price of the panels is $200, but a ceiling price of $150 is imposed, this will generate an increase in demand and a decrease in supply in the market, which will cause the product to disappear in the market, creating scarcity.
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