Figure 4-19

-Refer to Figure 4-19.When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,
A)the price will increase to P₃.
B)a surplus will occur at the new market price of P₂.
C)the market price will stay at P₁ due to the price ceiling.
D)a shortage will occur at the price ceiling of P₂.

Question

Figure 4-19
 
-Refer to Figure 4-19.When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,
A)the price will increase to P₃. 
B)a surplus will occur at the new market price of P₂. 
C)the market price will stay at P₁ due to the price ceiling. 
D)a shortage will occur at the price ceiling of P₂.

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price causes a shortage, as the quantity demanded exceeds the quantity supplied at that price. When the supply curve shifts left from S₁ to S₂, the shortage increases at the price ceiling of P₂.

Figure 4-19 -Refer to Figure 4-19.When the Price Ceiling Applies in This