Figure 6-2
-Refer to Figure 6-2.The price ceiling causes quantity

Question

Figure 6-2 
-Refer to Figure 6-2.The price ceiling causes quantity

Quizplus · Accepted Answer

The point where the supply and demand curves intersect is at a price of $14 and a quantity of 120 units. Since the price ceiling is set at $10, the quantity demanded will exceed the quantity supplied by the difference between the two prices ($14 - $10 = $4), multiplied by the quantity that would be supplied at the price ceiling ($4 * 85 units = 340 units). Therefore, quantity demanded will exceed quantity supplied by 85 units.

Figure 6-2 -Refer to Figure 6-2.The Price Ceiling Causes Quantity