If the government sets a price ceiling of Rs150 per litre on petrol while the market equilibrium price is Rs100 per litre, which of the following statements is accurate?

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A large rise in petrol demand might make the price ceiling effective as a binding limit.A substantial increase in petrol supply could make the price ceiling a binding restriction.Petrol will be in short supply.There will be an excess supply of petrol.

Explanation

When the price ceiling is set above the equilibrium price, it is initially non-binding. However, if demand for petrol increases significantly, the ceiling could become a binding constraint by preventing prices from rising above Rs150, thus limiting market adjustments.