In the figure provided, a price of Pc has been set by a government price control.

Question

Two intersecting lines are graphed. The horizontal axis is labeled Quantity and the vertical axis is labeled Price. A line with a positive slope is labeled S intersects a line with a negative slope labeled D. A horizontal dashed line segment that starts at a point labeled P subscript c baseline on the vertical axis intersects each diagonal line above the intersection point. Each of two vertical dashed line segments that start at points labeled Q subscript 1 baseline and Q subscript 2 baseline, respectively, on the horizontal axis intersect each diagonal line, running to the left and to the right of the intersection point of the diagonal lines.

Given the associated quantity demanded, Q1 , and quantity supplied, Q2 , which of the following describes the quantity Q2−Q1 ?

(1 point)
Responses

the shortage resulting from the price floor Pc
the shortage resulting from the price floor upper p subscript c baseline

the surplus resulting from the price ceiling Pc
the surplus resulting from the price ceiling upper p subscript c baseline

the shortage resulting from the price ceiling Pc
the shortage resulting from the price ceiling upper p subscript c baseline

the surplus resulting from the price floor Pc

Answer 1

Based on the given description and terminology, the situation involves a government price control where a horizontal price line (Pc) intersects the supply (S) and demand (D) curves.

1. If the price is set above the equilibrium price (which results in Q1 being the quantity demanded and Q2 being the quantity supplied), this would indicate a price floor. In this case, the quantity supplied (Q2) exceeds the quantity demanded (Q1), leading to a surplus.

2. If the price is set below the equilibrium price, this would indicate a price ceiling, resulting in quantity demanded exceeding quantity supplied, leading to a shortage.

Since you're mentioning "Q2 - Q1," where Q2 is the quantity supplied at the price control (Pc) and Q1 is the quantity demanded at that same price, the result will indicate:

• A positive value (Q2 > Q1) implies a surplus when there’s a price floor.

So, given your context, the correct choice is:

the surplus resulting from the price floor Pc.