From the graph above, fixing maximum price of garri below equilibrium prices at P1 will

From the graph above, fixing maximum price of garri below equilibrium prices at P₁ will

Answer Details

If the maximum price of garri is fixed below the equilibrium price at P1, it means that buyers cannot legally offer to purchase garri above that price, while sellers cannot legally sell it above that price. This situation creates a price ceiling. In this case, the maximum price of garri is below the equilibrium price, so the price ceiling will have the effect of reducing the price that consumers pay for garri. This lower price will increase the quantity of garri demanded by consumers, as they can buy more garri for less money. At the same time, the lower price will reduce the quantity of garri supplied by producers, since they will receive less revenue for each unit of garri they sell. This will create an excess demand for garri, as buyers will want to purchase more garri than producers are willing to sell at the maximum price set by the price ceiling. In summary, fixing the maximum price of garri below the equilibrium price at P1 will increase the quantity of garri demanded by consumers and decrease the quantity of garri supplied by producers, resulting in an excess demand for garri.