Figure 6-4
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a

Question

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a

Quizplus · Accepted Answer

If the government sets a price ceiling at $6, it will be below the equilibrium price of $8 in the market. This will result in excess demand or shortage of the product as demand exceeds supply. The buyers who are unable to buy the product at the lower price will try to buy it from other markets or from the black market, resulting in a black market (iv) for the product. Also, the decreased price will reduce the incentive for producers to supply the product and may result in a decreased supply (i) of the product in the market. Therefore, options (i) and (iv) are the appropriate choices.

Figure 6-4 -Refer to Figure 6-4. a Government-Imposed Price of $6 in of $6