Figure 6-2

Refer to Figure 6-2. The price ceiling causes quantity

Question

Figure 6-2

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Refer to Figure 6-2. The price ceiling causes quantity

BlackTom AI · Accepted Answer

Examining Figure 6-2, focus on the effect of the price ceiling on the actual quantities demanded and supplied.
Option 1: 'supplied to exceed quantity demanded by 90 units.' This would imply a surplus created by the price ceiling, but a price ceiling typically creates a shortage (demand exceeds supply) rather than a surplus, so this is inconsistent with common outcomes of a binding price ceiling.
Option 2: 'demanded to exceed quantity supplied by 90 units.' This aligns with the standard result of a binding price ceiling: the ceiling lowers price, increasing quantity demanded but reducing quantity supplied, creating a shortage equal to the difference between demand and supply. If the graph indicates a 90-unit shortage, this phrasing correctly describes the situation.
Option 3: 'demanded to exceed quantity supplied by 30 units.' While this captures the idea of a shortage, it specifies a 30-unit gap, which contradicts the stated 90-unit shortage in the provided answer and the figure’s vertical gap between the demand and supply at the price ceiling.
Option 4: 'supplied to exceed quantity demanded by 60 units.' This would again indicate a surplus scenario, not a shortage; at a price ceiling, supply would not exceed demand by a positive amount in a typical shortage outcome.
Overall, the key concept is that a binding price ceiling creates a shortage where quantity demanded exceeds quantity supplied, and the problem’s given answer specifies the shortage magnitude as 90 units, matching Option 2’s phrasing.

Figure 6-2 Refer to Figure 6-2. The price ceiling causes quantity

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Figure 6-2 ​ Refer to Figure 6-2. The price ceiling causes quantity