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The price ceiling causes quantity demanded to exceed quantity supplied by:

a) 45 units.

b) 85 units.

c) 45 units and supplied to exceed quantity demanded.

d) 85 units and supplied to exceed quantity demanded.

1 Answer

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Final answer:

d) 85 units and supplied to exceed quantity demandedA price ceiling below equilibrium leads to an increase in quantity demanded to 19,000 and a stagnant quantity supplied at 15,000,

Step-by-step explanation:

The question deals with the concept of a price ceiling in economics and its effect on the quantity demanded and quantity supplied. When a price ceiling is imposed below the equilibrium price, it causes the quantity demanded to increase while the quantity supplied decreases, creating a shortage.

Referring to the provided example with the rental units, if the demand shifts from Do to D1, the new equilibrium would be at E1, but a price ceiling keeps the price from rising. In this case, the quantity supplied would stay at 15,000 units while the quantity demanded would increase to 19,000 units, resulting in a shortage of 4,000 units, or 85 units when considering the scale in thousands, as mentioned in the question.

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