At the price ceiling of $60, how much gasoline will be demanded?

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BlackTom AI · Accepted Answer

Question restatement: The problem asks, 'At the price ceiling of $60, how much gasoline will be demanded?' with a numerical answer of 80 provided.

Because this is a numerical question, the key is to identify the quantity demanded at the specified price, which depends on the demand schedule or demand function for gasoline. In other words, to determine the exact quantity demanded at P = 60, we need either:
- the demand curve data (or equation) to read off Qd when P = 60, or
- an explicit statement of Qd at P = 60.

Option analysis mindset (without new data):
- If the information were available, we would substitute P = 60 into the demand equation or locate the corresponding point on the demand curve to obtain Qd, which would be the quantity demanded.
- In a typical price-ceiling scenario, if the ceiling is set below the market-clearing price, quantity demanded at that ceiling is generally higher than the quantity supplied at that price, leading to a shortage. However, this intuition does not by itself yield a numeric quantity unless the demand (and supply) at P = 60 are known.

Specific considerations given no options:
- Since there are no multiple-choice options to evaluate, there are no alternative quantities to assess for correctness here. Without the demand schedule, any claim about Qd at P = 60 would be a guess, not an argument grounded in the data.
- The provided answer (80) implies that the quantity demanded when the price ceiling is $60 is 80 units. If we had the demand function, we would verify this by plugging P = 60 into the function and checking whether Qd = 80.

Note on potential misinterpretations:
- One might confuse quantity demanded with quantity supplied. A price ceiling typically constrains price but does not directly set quantity supplied; the actual traded quantity in the market could be the lesser of Qd(60) and Qs(60). Without Qs(60) data, we cannot confirm the traded quantity, only the demanded quantity at that price.
- If the problem intended to test understanding of price ceilings, the critical step is recognizing that the price ceiling determines Qd only through the demand relation, not arbitrarily; hence the numeric answer must be derived from the demand schedule.

In summary: To justify the numeric answer of 80 for Qd at P = 60, one would need the demand data or function. With the information given (no options and no demand data), we cannot independently confirm that 80 is correct; it would be the outcome derived from a specific demand relation evaluated at P = 60. If 80 is indeed the correct Qd, it corresponds to the demand at P = 60 according to the underlying demand curve used in this question.

QAMO 2010-004 Fall 2025 Unit 9: Welfare Economics -- Application Problem

At the price ceiling of $60, how much gasoline will be demanded?

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