-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10.The number of units that would be exchanged in this market would be
A) 150,since that is the equilibrium quantity and the price ceiling is below the equilibrium price.
B) 220,since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied).
C) 90,since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded).
D) 155,since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question

-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10.The number of units that would be exchanged in this market would be
A) 150,since that is the equilibrium quantity and the price ceiling is below the equilibrium price. 
B) 220,since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied). 
C) 90,since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). 
D) 155,since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Quizplus · Accepted Answer

When a price ceiling is set below the equilibrium price, the quantity exchanged is determined by the quantity supplied at that price, because suppliers are not willing to supply more than this quantity at the lower price. Thus, at a price ceiling of $10, the number of units that would be exchanged is the number of units supplied at that price, which is 90.