(Figure: Market for Sustainable Furniture) Consider the market for furniture made from sustainable, man-made forests that is shown in the figure. The government wants to encourage buyers to buy such furniture and places a price ceiling of $250 on the market. After the implementation of the price ceiling, the market quantity sold falls by _____ thousand units.

Question

Quizplus · Accepted Answer

Before the price ceiling, the market equilibrium is at a price of $300 and a quantity of 800. With the price ceiling of $250, the new demand curve is represented by the line parallel to the original demand curve at a price of $250. The new equilibrium point is at a quantity of 600. Therefore, the market quantity sold falls by 800-600 = 200 thousand units.

(Figure: Market for Sustainable Furniture) Consider the Market for Furniture