Asked by Caroline Bachus on Jun 13, 2024
Verified
In the figure given below,which of the following is true at the price ceiling,P?
A) Excess quantity supplied equals 300 gallons.
B) Excess quantity demanded equals 300 gallons.
C) Excess quantity supplied equals 500 gallons.
D) Excess quantity demanded equals 800 gallons.
E) Quantity demanded will be equal to quantity supplied.
Price Ceiling
A government-imposed limit on the price charged for a product, aimed at keeping prices from rising too high.
Quantity Demanded
The amount of a good or service consumers are willing and able to purchase at a given price.
Quantity Supplied
Quantity Supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price, directly influenced by the price level, among other factors.
- Understand the influence of state-mandated price limits on the balance of supply and demand.
- Determine the effects of establishing price limits, such as the occurrence of scarcity and maintenance challenges in the real estate market.
Verified Answer
DE
Dajohn EzellJun 17, 2024
Final Answer :
B
Explanation :
At the price ceiling (P), the quantity demanded (QD) exceeds the quantity supplied (QS) by 300 gallons. This is because the price ceiling is below the equilibrium price (Pe), which leads to an increase in the quantity demanded and a decrease in the quantity supplied. Therefore, Option B is correct as it states that the excess quantity demanded equals 300 gallons.
Learning Objectives
- Understand the influence of state-mandated price limits on the balance of supply and demand.
- Determine the effects of establishing price limits, such as the occurrence of scarcity and maintenance challenges in the real estate market.