If a price control is set below the equilibrium price, what is most likely to occur?

When a price control is established below the equilibrium price, it creates a situation where the price at which goods or services can be sold is less than the price that would naturally occur in a free market. This typically leads to an increase in quantity demanded because consumers find the lower price attractive, making them more willing to purchase more of the good or service.

At the same time, suppliers are less inclined to produce or sell the good at this lower price, resulting in a decrease in quantity supplied. Consequently, the situation results in a mismatch where the quantity demanded exceeds the quantity supplied, creating a shortage in the market. This scenario can lead to various consequences, such as long wait times for consumers, black markets, or rationing as suppliers try to manage the excess demand.

This phenomenon highlights the critical balance between supply and demand and the potential distortions that can arise when government interventions, such as price controls, affect market dynamics.