Question

Exhibit 4-9 price of good x quantity demanded quantity supplied $10 220 90 11 200 100 12 180 130 13 150 150 14 120 190 15 80 260 refer to exhibit 4-9. suppose that the government imposes a price ceiling at a price of $13. _________ units would be exchanged at the equilibrium price and ____________ units would be exchanged with the price ceiling in effect.

a. 110; 180



b. 150; 150



c. 150; 90



d. 150; 220

Answer 1

b. 150; 150

d. 150; 220

Answer 2

The answer is: b

Step-by-step explanation:

Assuming the market for good x is competitive, that is, no consumer or producer solely influences the market; then the market for good x is in equilibrium at the point where the quantity demanded is equal to the quantity supplied. The price of good x at this point is optimal for the market and is known as the equilibrium price. A price ceiling is a price that is lower than equilibrium price, meaning that consumers would be able to purchase goods at a lower price than the equilibrium price. The equilibrium price and quantity of good x is $13 and 150 units respectively. Since the price ceiling is equal to the equilibrium price of $13, then the quantity demanded and supplied will remain fixed at 150 units which is the optimal quantity.