Figure 3.6

-Assume that the market described by the demand and supply curves in Figure 3.6 is originally in equilibrium. What is the most likely consequence of a government-imposed price ceiling at $10 per unit?

Question

Figure 3.6
 
-Assume that the market described by the demand and supply curves in Figure 3.6 is originally in equilibrium. What is the most likely consequence of a government-imposed price ceiling at $10 per unit?

Quizplus · Accepted Answer

A government-imposed price ceiling at $10 per unit will result in the price being lower than the equilibrium price. This will cause a decrease in the quantity supplied by producers as they will be less willing to produce the good at the lower price. Therefore, the correct choice is C, as quantity supplied will decrease.

Figure 3.6 -Assume That the Market Described by the Demand and Supply