Exhibit 5-2

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

Question

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

Quizplus · Accepted Answer

A price ceiling set below the equilibrium price (which is not provided in the question but is implied to be above $4) causes a shortage. The quantity of butter purchased will be limited to the quantity supplied at the price ceiling, not the quantity demanded. Without specific supply and demand curves or quantities, we typically assume the quantity purchased equals the quantity suppliers are willing to sell at the ceiling price, which is not explicitly given here. However, based on the choices provided and typical outcomes of a price ceiling, the best inference is that the quantity purchased would decrease compared to the equilibrium quantity. Since no specific details are provided, and assuming a standard interpretation of supply and demand dynamics, the correct answer is chosen based on the typical effects of a price ceiling, which would be to reduce the quantity available for purchase to below the equilibrium level.

Exhibit 5-2 ​

Exhibit 5-2