If a government imposes a price ceiling on essential goods resulting in shortages, what is the underlying cause of the reduced market efficiency observed in this scenario?

When a government sets a price ceiling on essential goods, it means that the price cannot go above a certain level. This often leads to shortages because the price may be too low for producers to make enough of the product. For example, if the government sets a price ceiling on bread, bakers may not find it profitable to bake as much bread, leading to fewer loaves available in stores. As a result, consumers may face long lines or empty shelves, which shows that the market is not working efficiently. This situation causes a misallocation of resources, where the supply does not meet the demand, leading to overall inefficiency in the market.