QUESTION 5Use the following table to answer the questions that follow.Market for CornQuantityQuantitySuppliedPriceYearDemanded$2.00200,000100,000$2.50186,0002125,000$3.00184,000141,000$3.50169,000169,0004$4.00161,0005181,000$4.50200,0006155,000$5.007120,000223,000If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn?a. There would be a surplus of 61,000.b. There would be a shortage of 125,000.c. There would be neither a shortage nor a surplus.d. There would be a shortage of 61,000.e. There would be a shortage of 186,000.O O

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Asked Nov 15, 2019
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QUESTION 5
Use the following table to answer the questions that follow.
Market for Corn
Quantity
Quantity
Supplied
Price
Year
Demanded
$2.00
200,000
100,000
$2.50
186,000
2
125,000
$3.00
184,000
141,000
$3.50
169,000
169,000
4
$4.00
161,000
5
181,000
$4.50
200,000
6
155,000
$5.00
7
120,000
223,000
If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn?
a. There would be a surplus of 61,000.
b. There would be a shortage of 125,000.
c. There would be neither a shortage nor a surplus.
d. There would be a shortage of 61,000.
e. There would be a shortage of 186,000.
O O
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QUESTION 5 Use the following table to answer the questions that follow. Market for Corn Quantity Quantity Supplied Price Year Demanded $2.00 200,000 100,000 $2.50 186,000 2 125,000 $3.00 184,000 141,000 $3.50 169,000 169,000 4 $4.00 161,000 5 181,000 $4.50 200,000 6 155,000 $5.00 7 120,000 223,000 If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn? a. There would be a surplus of 61,000. b. There would be a shortage of 125,000. c. There would be neither a shortage nor a surplus. d. There would be a shortage of 61,000. e. There would be a shortage of 186,000. O O

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Expert Answer

Step 1

The equilibrium in the economy is determined at the intersection of the market demand curve and the market supply curve. Thus, at the point of equilibrium, there would be no excess demand or supply in the economy. From the table it is identified that the point where the demand and supply equals is at the output of 169,000 and at the price of $3.50.

Step 2

The price ceiling is the government determined maximum price that the seller can charge from the consumer. It is also given that the price ceiling is determined to be $2.50. since the ceiling price is lower than the market equilibrium price, the ceiling price bonds the market and the price level would fall to $2.50.

Step 3

When the market price is lower than the equilibrium price, it would become more profitable for the consumers whereas not profitable for the producers. This means that the demand for the product in the market would increases whereas the supply would decrease. From the tab...

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Size of Shortage Quantity demanded-Quantity supplied 186,000-125,000 =61,000

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