Complete the following paragraph by pulling down the correct word or phrase. When the government imposes a binding price ceiling on loaves of bread, producers will want to supply (a) bread and consumers will demand (b) bread. Therefore, a binding price ceiling will lead to a (c) of bread. The price ceiling will have other effects as well. The size of a loaf of bread and the quality of bread would (d) . Although the consumers lucky enough to buy bread would pay a lower price, their opportunity cost of buying bread would (e) . The price ceiling would also cause other changes over time. In the long run, the demand for and supply of bread becomes (f) elastic, leading to a (g) .

producers will want to supply (a)less bread

consumers will demand (b)more bread.

The binding price ceiling causes the price of bread to be lower than it would be in the free market. This makes consumers demand more bread becaues it is now cheaper than normal, but this also makes producers supply less bread.

Therefore, a binding price ceiling will lead to a (c)scarcity of bread.

The scarcity is caused by the dynamic above: consumers demand more bread than the amount that producers supply.

The size of a loaf of bread and the quality of bread would (d)fall

This would happen because suppliers have less incentive to produce bread, let alone bread of high quality.

Although the consumers lucky enough to buy bread would pay a lower price, their opportunity cost of buying bread would (e) be higher

Would be higher because of the lower quality of the bread.

The price ceiling would also cause other changes over time. In the long run, the demand for and supply of bread becomes (f) elastic, leading to a (g) change in the market

In the long run, even less bread will be supplied because of the binding price ceiling, and the scarcity will cause consumers to replace bread with a substitute, for example: rice or any other form of pastry.

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