At a price ceiling of $6 per sheet of drywall, quantity demandedis 100 and quantity supplied is 75. What will happen in thedrywall market if there is an increased demand for drywall inthe construction industry?

Question

Quizplus · Accepted Answer

A price ceiling of $6 per sheet of drywall creates a shortage of 25 units (100-75). If there is an increased demand for drywall, the shortage will increase above 25 units, as the quantity demanded will exceed the quantity supplied. This is because the price ceiling prevents suppliers from increasing their output to meet the increased demand. Therefore, consumers will have to compete for the limited supply of drywall, causing the shortage to increase. Equilibrium will not be restored as long as the price ceiling remains in place.

At a Price Ceiling of $6 Per Sheet of Drywall