What is the primary economic consequence of a price ceiling set below the equilibrium price in a competitive market?

💡 Solution & Explanation

A price ceiling set below the equilibrium market price creates a binding constraint that prevents prices from rising to clear the market. At this artificially low price, consumer demand exceeds producer supply, resulting in a persistent market shortage. Surpluses typically arise when price floors are established above equilibrium levels. Price controls are a standard microeconomic concept tested in civil services and banking exams.