Question

Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units.

Answer 1

Question Completion:

Exhibit 4-11

Price of Good ABC Quantity Demanded Quantity Supplied

$4 100 40

5 80 80

6 60 110

7 50 160

Options:

a. 20

b. 40

c. 100

d. 60

Answer:

The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units.

b. 40

Step-by-step explanation:

The suppliers of good ABC cannot sell above $4 since it is the price ceiling. A price ceiling is the opposite of a price floor. A price ceiling usually prevents the market of good ABC from reaching equilibrium as suppliers will be unwilling to supply more units of ABC.