Homework Clinic
Social Science Clinic => Economics => Topic started by: yulisa3298 on Nov 23, 2022
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Question 1
Price Ceilings and their Consequences
The table shows the quantity of bread that is demanded and supplied at various prices.
| Price | Quantity Demanded | Quantity Supplied |
| 1.50 | 540 | 190 |
| 2.50 | 450 | 275 |
| 3.50 | 360 | 360 |
| 4.50 | 270 | 445 |
The government sets a price ceiling at $2.50. The price ceiling causes a ________ (shortage/surplus) of ________.
◦ shortage, 175
◦ surplus, 350
◦ shortage, 350
◦ surplus, 175
Question 2
The table shows the quantity of office space that is demanded and supplied at various prices.
| Price | Quantity Demanded | Quantity Supplied |
| 1000 | 235.714286 | 172.222222 |
| 1250 | 200 | 200 |
| 1500 | 164.285714 | 227.777778 |
| 1750 | 128.571429 | 255.555556 |
The government sets a price ceiling at $1500. The price causes a ________ (shortage/surplus) of ________.
◦ shortage, 63.4920635
◦ surplus, 63.4920635
◦ shortage, 0
◦ surplus, 164.285714
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Answer 1
shortage, 175
At $2.50, quantity demanded (450) is greater than quantity supplied (275). Therefore, there is a shortage of 450 - 275 = 175.
Answer 2
shortage, 0
The equilibrium price and quantity is at $1250 and 200. Because the equilibrium price is below the price ceiling, the price ceiling has no effect and causes a shortage of 0 and a surplus of 0.
Office space will sell for the equilibrium price and quantity.