A price ceiling of P2 has been set, creating a shortage as demand exceeds supply at that price. A price control, either a price ceiling of P2 or a price floor of P2, has been implemented, leading to a shortage where demand is greater than supply at the set price. The solution is that a price ceiling has been set at P2.

1. A) price ceiling has been set at P 1 .
B) price floor has been set at P 1 .
C) price ceiling has been set at P 2 .
D) price floor has been set at P 2 .
Solution
A price control has been set which has led to a shortage. This means that a: C = price ceiling has
been set at P 2.
At the point P 2 demand > supply.
I hope my solution solves your query.
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