A government decides to set a price ceiling on bread so that bread is affordable to the poor. The conditions of demand and supply are given in the table below. What is the equilibrium price before the price ceiling? What will the excess supply or the shortage be if the price ceiling is set at $2.40? Price Qd Qs $1.60 9,000 5,000 $2.00 8,500 5,500 $2.40 8,000 6,400 $2.80 7,500 7,500 $3.20 7,000 9,000 $3.60 6,500 11,000 $4.00 6,000 15,000 A. $2.80; 1,600 shortage B. $2.80; 1,600 excess supply C. $2.40; 1,600 shortage
A government decides to set a price ceiling on bread so that bread is affordable to the poor. The conditions of demand and supply are given in the table below. What is the equilibrium price before the price ceiling? What will the excess supply or the shortage be if the price ceiling is set at $2.40? Price Qd Qs $1.60 9,000 5,000 $2.00 8,500 5,500 $2.40 8,000 6,400 $2.80 7,500 7,500 $3.20 7,000 9,000 $3.60 6,500 11,000 $4.00 6,000 15,000 A. $2.80; 1,600 shortage B. $2.80; 1,600 excess supply C. $2.40; 1,600 shortage
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A government decides to set a
| Price | Qd | Qs |
|---|---|---|
| $1.60 | 9,000 | 5,000 |
| $2.00 | 8,500 | 5,500 |
| $2.40 | 8,000 | 6,400 |
| $2.80 | 7,500 | 7,500 |
| $3.20 | 7,000 | 9,000 |
| $3.60 | 6,500 | 11,000 |
| $4.00 | 6,000 | 15,000 |
A. $2.80; 1,600 shortage
B. $2.80; 1,600 excess supply
C. $2.40; 1,600 shortage
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