Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price ceiling of $50 per ton. What would be the resulting market distortion?
A) Shortage of 120 tons of fish
B) Shortage of 175 tons of fish
C) Surplus of 120 tons of fish
D) Surplus of 175 tons of fish

Question

Quizplus · Accepted Answer

At a price ceiling of $50, Qd = 300 - 2.5(50) = 175 and Qs = -20 + 1.5(50) = 55. The shortage is 175 - 55 = 120 tons.

Consider a Market for Fish Whose Market Demand and Market