Day care for children is a competitive industry in long-run equilibrium at a price of $60 per day. In an effort to make day care more affordable for a larger number of families, the government passes a law that limits the amount day care providers can charge to $45 per day. As a result of this price ceiling, A. parents have a more difficult time finding day care providers for their children. B. the demand for day care increases and causes price to rise above the original $60 per day. C. the demand for day care increases and many new day care centers are established. D. the supply of day care services falls and causes price to fall below $45 per day.

A price ceiling is usually set by the government or an agency of the government and it usually places a maximum amount on the prices that can be charged for a good or service.

When a price ceiling is set below equilibrium price, it usually discourages producers or suppliers who respond by reducing the quantity supplied.

Therefore, if a price ceiling is placed on day care, a lot of day care centres would close which would make it difficult for parents to find centres for their kids. Since a price ceiling is binding, prices would not increase.

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