Figure 6-4

-Refer to Figure 6-4.Which of the following price controls would cause a shortage of 10 units of the good?

Question

Figure 6-4
 
-Refer to Figure 6-4.Which of the following price controls would cause a shortage of 10 units of the good?

Quizplus · Accepted Answer

In Figure 6-4, the equilibrium price and quantity are $6 and 40 units respectively. If a price ceiling of $5.50 is imposed, it is below the equilibrium price and will lead to an excess demand or shortage of 10 units (40-30). Thus, option A is the correct answer. A price floor would not cause a shortage in this case, as it sets a minimum price above the equilibrium price, and would result in excess supply or a surplus. Prices above the equilibrium price will not cause a shortage either because a higher price will cause people to supply more of the good than is demanded.

Figure 6-4 -Refer to Figure 6-4.Which of the Following Price Controls Would