Exhibit 5-2

The diagram below represents the market for butter.
-Refer to Exhibit 5-2. If a price floor of $4 is imposed, ____ units of butter will be purchased.

Question

Exhibit 5-2
​
The diagram below represents the market for butter. 
-Refer to Exhibit 5-2. If a price floor of $4 is imposed, ____ units of butter will be purchased.

Quizplus · Accepted Answer

At a price of $4, the quantity demanded of butter is 3,000 units (where the demand curve intersects the price floor). However, the quantity supplied at this price is 7,000 units (where the supply curve intersects the price floor). This means there is a surplus of butter of 4,000 units (7,000 supplied minus 3,000 demanded).

Exhibit 5-2 ​

Exhibit 5-2