-Figure 4-1 shows the supply and demand for socks.If a price ceiling of $4 per pair is imposed by the government
A)there will be a shortage of 14 pairs of socks
B)there will be a shortage of 10 pairs of socks
C)there will be neither a shortage nor a surplus of socks
D)there will be a surplus of 10 pairs of socks
E)there will be a surplus of 14 pairs of socks

Question

-Figure 4-1 shows the supply and demand for socks.If a price ceiling of $4 per pair is imposed by the government
A)there will be a shortage of 14 pairs of socks 
B)there will be a shortage of 10 pairs of socks 
C)there will be neither a shortage nor a surplus of socks 
D)there will be a surplus of 10 pairs of socks 
E)there will be a surplus of 14 pairs of socks

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price causes a shortage. If the equilibrium quantity is 20 pairs and the quantity supplied at $4 is 10 pairs, while the quantity demanded is 24 pairs, the shortage is 24 - 10 = 14 pairs. However, if the options are limited to a shortage of 10 pairs, it suggests a miscalculation or misinterpretation in the options provided.

-Figure 4-1 Shows the Supply and Demand for Socks