-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10._________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.
A) 150; 220
B) 150; 70
C) 110; 180
D) 150; 90

Question

-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10._________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.
A) 150; 220 
B) 150; 70 
C) 110; 180 
D) 150; 90

Quizplus · Accepted Answer

In a free market, the quantity exchanged is determined by the equilibrium where supply equals demand, which is 150 units in this scenario. With a price ceiling of $10, the quantity exchanged is limited by the quantity supplied at that price, which is lower than the equilibrium quantity, in this case, 90 units.