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Figure: Government Price Controls
-(Figure: Government Price Controls) Refer to the figure. The government enacts a price control causing a shortage of 15 units of the good. Therefore, the ________ is set at ________.
A) price floor; $31
B) price floor; $17
C) price ceiling; $10
D) price ceiling; $17

Question

Use the following to answer questions:
Figure: Government Price Controls 
-(Figure: Government Price Controls) Refer to the figure. The government enacts a price control causing a shortage of 15 units of the good. Therefore, the ________ is set at ________.
A) price floor; $31 
B) price floor; $17 
C) price ceiling; $10 
D) price ceiling; $17

Quizplus · Accepted Answer

A shortage of 15 units indicates that the quantity demanded exceeds the quantity supplied, which is characteristic of a price ceiling set below the equilibrium price. In the figure, the price ceiling is set at $10, resulting in the shortage. Therefore, choice C is the correct answer. The other three choices imply a price floor, which would result in a surplus, not a shortage, under the given conditions.

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