The following table shows the demand for,and supply of,soya milk in a particular market (the quantities are in thousands of liters per day):

-Refer to the above information to answer this question.Suppose that the government introduces an effective price ceiling which is 20 cents different from the equilibrium price.What will be the result?

Question

The following table shows the demand for,and supply of,soya milk in a particular market (the quantities are in thousands of liters per day):
 
-Refer to the above information to answer this question.Suppose that the government introduces an effective price ceiling which is 20 cents different from the equilibrium price.What will be the result?

Quizplus · Accepted Answer

The equilibrium price is $2.50 and the effective price ceiling is $2.30. This price is lower than the equilibrium price which means that the quantity demanded will increase (to 160) and quantity supplied will decrease (to 128) creating a shortage of 32. Therefore, the correct answer is D, a shortage of 12 (32-20=12).

The Following Table Shows the Demand For,and Supply Of,soya Milk