Considera competitive market with the following diloar P USD

Considera competitive market with the following diloar P (USD/lb) Qd(m lbs) Q (m lbs) 14 16 18 20 60 20 18 16 80 100 120 Suppose that the government sets a price ceiling equal to 80 USD/lb. There is a: O Surplus of 4 m lbs Shortage of 2 m lbs O Shortage of 4 m lbs O Surplus of 2 m lbs

Solution

Maximum price = $80/lb

Qs = 16 m lbs

Qd = 20 m lbs

Qd > Qs , there is a shortage

Shortage = Qd - Qs = 4 m lbs