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 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 floor Pc
the shortage resulting from the price floor 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

In the scenario described, the government has imposed a price ceiling (Pc), which is a maximum legal price that can be charged for a good or service. When the price is set below the equilibrium price (where supply equals demand), this often leads to a shortage in the market.

In this case, you have quantity demanded at Q1 and quantity supplied at Q2. Since quantity demanded (Q1) is greater than quantity supplied (Q2) at the price ceiling, there is a shortage represented by the difference Q2 - Q1.

Given the options provided, the correct response would be:

the shortage resulting from the price ceiling Pc.