The supply curve and price ceiling .

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Chapter 4, Problem 5QP

To determine

The supply curve and price ceiling.

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A nation with a low income chooses to set a price ceiling on bread to guarantee that it is affordable for the poor. The table below shows the supply and demand parameters. Before the price ceiling, what were the equilibrium price and equilibrium quantity? If the price ceiling is set at $2.40 what would the excess demand or the shortage (quantity demanded minus quantity supplied) be? What about at $2.00? Or at $3.60? Draw graphs to present your solutions. Price M༔TM ༥་༥ ༧༥FF, ༔vi Qd Qs $1.60 9,000 5,000 $2.00 8,500 5,500 $2.40 8,000 6,400 $2.80 7,500 7,500 $3.20 7,000 9,000 $3.60 6,500 11,000 $4.00 6,000 15,000

A government decides to set a price ceiling on bread so that bread is affordable to the poor. The conditions of demand and supply are given in the table below. What is the equilibrium price before the price ceiling? What will the excess supply or the shortage be if the price ceiling is set at $2.40? Price Qd Qs $1.60 9,000 5,000 $2.00 8,500 5,500 $2.40 8,000 6,400 $2.80 7,500 7,500 $3.20 7,000 9,000 $3.60 6,500 11,000 $4.00 6,000 15,000 A. $2.80; 1,600 shortage B. $2.80; 1,600 excess supply C. $2.40; 1,600 shortage

A government decides to set a price ceiling on eggs so that eggs are affordable to the poor. The conditions of demand and supply are given in the table below. What will the excess supply or the shortage be if the price ceiling is set at $2.00? Price Qd Qs $1.60 9,000 5,000 $2.00 8,500 5,500 $2.40 8,000 6,400 $2.80 7,500 7,500 $3.20 7,000 9,000 $3.60 6,500 11,000 $4.00 6,000 15,000 Question 50 options: a) 8,500 excess supply. b) 3,000 excess supply. c) 1,500 shortage. d) 3,000 shortage.