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Suppose a Market Is Controlled by a Monopolist as Depicted

Question 10

Multiple Choice

Suppose a market is controlled by a monopolist as depicted in the diagram below.P1 represents the equilibrium price and P2 a price ceiling set by law.Which of the following statements is true? Suppose a market is controlled by a monopolist as depicted in the diagram below.P<sub>1</sub> represents the equilibrium price and P<sub>2</sub> a price ceiling set by law.Which of the following statements is true? A) The price ceiling will cause the equilibrium quantity to rise from Q<sub>1</sub> to Q<sub>2</sub>. B) The price ceiling will create a surplus of Q<sub>2</sub> - Q<sub>1</sub>. C) The price ceiling will create a shortage of Q<sub>2</sub> - Q<sub>1</sub>. D) The price ceiling will create a shortage of Q<sub>2 </sub>- Q<sub>0</sub>. E) The market will still be in equilibrium at the lower price.


A) The price ceiling will cause the equilibrium quantity to rise from Q1 to Q2.
B) The price ceiling will create a surplus of Q2 - Q1.
C) The price ceiling will create a shortage of Q2 - Q1.
D) The price ceiling will create a shortage of Q2 - Q0.
E) The market will still be in equilibrium at the lower price.

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