FIGURE 5-1
-Refer to Figure 5-1. If the government imposes an administered price at P2, the result will be a
A) surplus of BD.
B) shortage of AC.
C) shortage of FD.
D) surplus of AF.
E) surplus of 0D.

Question

FIGURE 5-1
-Refer to Figure 5-1. If the government imposes an administered price at P2, the result will be a
A) surplus of BD. 
B) shortage of AC. 
C) shortage of FD. 
D) surplus of AF. 
E) surplus of 0D.

Quizplus · Accepted Answer

If the administered price P2 is above the equilibrium price, it will result in a surplus, as the quantity supplied will exceed the quantity demanded.

FIGURE 5-1 -Refer to Figure 5-1. If the Government Imposes an Administered