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The more elastic the supply and the demand curves are: A. the greater shortage an effective price ceiling will create. B. the smaller surplus an effective price ceiling will create. C. the greater surplus an effective price ceiling will create. D. the smaller shortage an effective price ceiling will create.

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Answer:

A. the greater shortage an effective price ceiling will create.

Explanation:

Supply / demand price elasticity measures the sensitivity of supply / demand to changes in the price of the good. Thus, if supply / demand for the good is elastic, it is assumed that slight price changes will drastically affect supply / demand for the good. This means that price changes will cause supply / demand shortages for the good, so that a ceiling price will be set so that demand / supply for the good will be maintained.

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