Currently, 75,000 units of a good are traded on a market. The government imposes a limit of a maximum of 50,000 units that may be traded on the market. This will create excess supply.

Question

Quizplus · Accepted Answer

The limit imposed by the government is lower than the current amount being traded on the market. Therefore, there will be a decrease in supply which may lead to a shortage rather than excess supply.

Currently, 75,000 Units of a Good Are Traded on a Market