What is the likely effect on the demand for wheat if the government were to introduce a price ceiling?

Question

What is the likely effect on the demand for wheat if the government were to introduce a price
ceiling?

Answer 1

Any time price drops, quantity demanded (not demand itself) increases.

With the price ceiling in place, assuming it's an effective ceiling (ie, the ceiling price isn't $40/bushel when the market calls for $22/bushel), quantity supplied will be curtailed, so there will be a shortage.

Answer 2

Demand would rise because the price was lower.

The side effects on supply are worth talking about, however. Introducing a price ceiling means that at a certain point, the demand can not be controlled by increasing the price. That means that there is less incentive to produce wheat, leading to shortages if demand exceeded supply, or inflated prices if demand was less than supply.

Answer 3

The effect of price ceiling on demand for wheat will be almost nil.

Answer 4

Depends on whether the price seiling is above or below the current market price. If it is above, nothing would happen. If it is below, shortage is likely to develop.