In the figure provided, a price of Pc

Question

has been set by a government price control.

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

the surplus resulting from the price floor Pc
the surplus resulting from the price floor upper p subscript c baseline
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Answer 1

In the scenario you described, where a government price control is set at a price \( P_c \) that is below the equilibrium price, the quantity demanded \( Q_1 \) will be greater than the quantity supplied \( Q_2 \). This creates a shortage in the market.

Since \( Q_1 \) represents the quantity demanded at the price ceiling \( P_c \) and \( Q_2 \) represents the quantity supplied at that same price, the difference \( Q_2 - Q_1 \) will illustrate the shortage:

• \( Q_2 - Q_1 \) is negative since \( Q_2 < Q_1 \).

Therefore, the correct description for \( Q_2 - Q_1 \) in this context is "the shortage resulting from the price ceiling \( P_c \)."

Thus, the correct response is:

the shortage resulting from the price ceiling \( P_c \).