Question

If the government sets a price ceiling of $4, market forces will cause:

a. the quantity demanded to drop and the quantity supplied to rise.
b. a shortage will exist. a surplus will exist.
c. market forces will cause demand to drop and supply to rise.
d. market forces will cause supply to drop and demand to rise.

Answer 1

The table for the question is in the attachment.

Answer:

b. a shortage will exist.

Step-by-step explanation:

Considering the table from the diagram, it shows that, when the price of Refrigerator Magnet is at 4 dollars, the Quantity demanded is 9, while the Quantity supplied is 4. This equates that, there is shortage of 5 in quantity supplied.

In other words, at the price of 4 dollars, the Quantity demanded is greatee than the Quantity supplied by 5.

Hence, the correct answer is B. A shortage will exist.