In a competitive market,the market demand is Q^d = 70 − 3P and the market supply is Q^s = 6P.A price ceiling of $4 will result in a:

Question

Quizplus · Accepted Answer

To find the equilibrium quantity, we set the market demand equal to the market supply:

70 − 3P = 6P

9P = 70

P = 7.78 (rounded to two decimal places)

Since the price ceiling is $4, which is below the equilibrium price, there will be excess demand or a shortage.

At a price of $4: 
Market demand = 70 − 3(4) = 58

Market supply = 6(4) = 24

Shortage = 58 − 24 = 34

Therefore, the correct answer is B, a shortage of 34 units.

In a Competitive Market,the Market Demand Is Qd = 70