Use the following to answer questions:
Figure: Price Controls
-(Figure: Price Controls) Refer to the figure. Which price control would cause a shortage of 20 units of the good?
A) a price ceiling of $10
B) a price floor of $10
C) a price ceiling of $6
D) a price floor of $6

Question

Use the following to answer questions:
Figure: Price Controls 
-(Figure: Price Controls) Refer to the figure. Which price control would cause a shortage of 20 units of the good?
A) a price ceiling of $10 
B) a price floor of $10 
C) a price ceiling of $6 
D) a price floor of $6

Quizplus · Accepted Answer

A price ceiling of $6 would cause a shortage of 20 units of the good because at that price, the quantity demanded exceeds the quantity supplied. At the equilibrium price of $8, the quantity demanded and supplied are equal, so there is neither a shortage nor a surplus. Price floors, on the other hand, create surpluses, not shortages.

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