When a price ceiling is in effect, what happens to the relationship between quantity demanded and quantity supplied?

When a price ceiling is in effect, the government sets a maximum price for a good or service that is typically below the equilibrium price. This leads to a situation where, at that lower price, consumers find the good or service more affordable, resulting in an increase in quantity demanded. On the other hand, producers may find it less profitable to supply the good at this lower price, which often causes a decrease in the quantity supplied.

As a result, the quantity demanded exceeds the quantity supplied when a price ceiling is implemented. This mismatch creates a shortage in the market, as more consumers want to buy the product at the lower price than what is available from producers. Thus, the correct conclusion is that, under a price ceiling, quantity demanded is indeed greater than quantity supplied. This is a key concept in understanding how price controls influence market dynamics.