In the figure given below the government imposes a price ceiling on wheat at $6 per bushel which is below the market-clearing price of $8.D₁ and D₂ are the demand curves for wheat of Jane and Jolly respectively and DM is the market demand curve for wheat.A total of 40 bushels of wheat is available in the market and each of the consumers have been issued a tradable coupon for 20 bushels of wheat.

-Refer to Figure. Which of the following situations would arise if the price of the coupon is above its equilibrium price?

Question

In the figure given below the government imposes a price ceiling on wheat at $6 per bushel which is below the market-clearing price of $8.D₁ and D₂ are the demand curves for wheat of Jane and Jolly respectively and DM is the market demand curve for wheat.A total of 40 bushels of wheat is available in the market and each of the consumers have been issued a tradable coupon for 20 bushels of wheat.
 
-Refer to Figure. Which of the following situations would arise if the price of the coupon is above its equilibrium price?

Quizplus · Accepted Answer

When the price of a good is set above its equilibrium price, the quantity supplied exceeds the quantity demanded, leading to a surplus of the good. In this case, setting the price of the coupon above its equilibrium price would result in a surplus of wheat.

In the Figure Given Below the Government Imposes a Price