Multiple Choice
The supply and demand curves for a product are as follows. What is quantity demanded if a price floor of \$21 is set?
QD = 45 – 2P
QS = -15 + P
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5. Consumer and Producer Surplus; Price Ceilings and Price Floors
Quantitative Analysis of Price Ceilings and Floors: Finding Points
Multiple Choice
The supply and demand curves for a product are as follows. What is quantity supplied if a price ceiling of \$4 is set?
QD = 600 – 100P
QS = -150 + 150P
A
150
B
200
C
300
D
450
E
600
Verified step by step guidance1
Understand the concept of a price ceiling: A price ceiling is a government-imposed limit on how high a price can be charged for a product. It is typically set below the equilibrium price to make goods more affordable.
Identify the given equations: The demand curve is given by QD = 600 - 100P, and the supply curve is given by QS = -150 + 150P.
Substitute the price ceiling into the supply equation: Since the price ceiling is set at \$4, substitute P = 4 into the supply equation QS = -150 + 150P.
Calculate the quantity supplied: After substituting P = 4 into the supply equation, solve for QS to find the quantity supplied at the price ceiling.
Interpret the result: The calculated quantity supplied will tell you how much of the product suppliers are willing to provide at the price ceiling of \$4.
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