Figure: Effects of Price Ceilings (Figure: Effects of Price Ceilings) Refer to the figure. At a priceceiling of $2 per unit, consumers are willing to pay a maximumof:

Question

Figure: Effects of Price Ceilings  (Figure: Effects of Price Ceilings) Refer to the figure. At a priceceiling of $2 per unit, consumers are willing to pay a maximumof:

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At a price ceiling of $2 per unit, the quantity demanded increases to 120 units, but the quantity supplied decreases to 80 units. This creates a shortage of 40 units. Since there are more buyers than sellers at the price ceiling, buyers have increased bargaining power, and the market price increases to the point where the quantity supplied equals the quantity demanded. In this case, the market price settles at $3 per unit. Therefore, consumers are willing to pay a maximum of $3 per unit, which is the market price under the price ceiling.