Question

The government sets the price of subsidized corn too low. Which of the following statements describes the result?

At that price, quantity demanded exceeds quantity supplied.
At that price, quantity demanded equals quantity supplied.
At that price, quantity demanded is lower than quantity supplied.
At that price, quantity demanded and quantity supplied reach a price floor.

Answer 1

A. Price too low increases demand and can cause shortage.

Answer 2

Thank you for your help :)