Use the figure below to answer the following questions. Figure 6.1.2
-Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then
A)100 units will be sold at a price of $20 each.
B)100 units will be sold at a price of $15 each.
C)150 units will be sold at a price of $15 each.
D)200 units will be sold at a price of $10 each.
E)100 units will be sold at a price of $10 each.

Question

Use the figure below to answer the following questions.  Figure 6.1.2
-Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then
A)100 units will be sold at a price of $20 each. 
B)100 units will be sold at a price of $15 each. 
C)150 units will be sold at a price of $15 each. 
D)200 units will be sold at a price of $10 each. 
E)100 units will be sold at a price of $10 each.

Quizplus · Accepted Answer

A price ceiling is a maximum price that can be charged for a good or service. In this case, if the price ceiling is set at $10, then the quantity demanded will be 100 units (where the demand curve intersects the price ceiling). However, at a price of $10, the quantity supplied is 150 units (where the supply curve intersects the price ceiling). This creates a shortage of 50 units. Since the price cannot rise to eliminate the shortage, the quantity sold will be limited to the quantity demanded at the price ceiling, which is 100 units at a price of $10 each.

Use the Figure Below to Answer the Following Questions