Answer:
d) 110; 180
Explanation:
Price ceilings is put in place to ensure a price does not rise above a particular level.
When a price ceiling is below the equilibrium price, the quantity demanded for will e greater than quantity supplied, and excess demand will arise.
original equilibrium of $12
180 units would be exchanged in a free market (when equilibrium price is $12), and 110 units would be exchanged with the price ceiling in effect.
Answer:
c) 110; 180
Explanation:
A free market is a market where price is determined by the forces of demand ans supply without government intervention. The price so determined is referred as the equilibrium price in which quantity demanded is equal to the quantity supplied.
In the question, equilibrium price is obtained at $12 where 180 quantity demanded is equal to the 180 quantity supplied.
A price ceiling is the maximum price that can be charged by suppliers as imposed by the government.
When price ceiling of $10 is imposed by the government, consumer will demand 220 units while supplier will supply 110 units leading to an excess demand of 110 units. As result, only 110 that is supplied by the supplier will be exchanged.
Therefore, if government imposes a price ceiling at a price of $10. 180 units would be exchanged in a free market, and 110 units would be exchanged with the price ceiling in effect.
