Use the table to answer the question.

Question

Price ($) Quantity Demanded (thousands) Quantity Supplied
(thousands)
1,000 600 300
1,500 500 500
2,000 400 700
2,500 300 900
The table gives the supply and demand schedules in a market for apartments. A government price control is implemented that results in a shortage of 300,000 apartments. Which price control must have been used?

(1 point)
Responses

a price ceiling of $1,000
a price ceiling of 1,000 dollars

a price ceiling of $2,000
a price ceiling of 2,000 dollars

a price floor of $2,000
a price floor of 2,000 dollars

a price floor of $1,000

Answer 1

To determine which price control resulted in a shortage of 300,000 apartments, we need to analyze the data in the table.

The shortage refers to the situation where the quantity demanded exceeds the quantity supplied at a certain price. Let's look for the price where this is the case.

1. At a price of $1,000:

   • Quantity Demanded: 600,000
   • Quantity Supplied: 300,000
   • Shortage: 600,000 - 300,000 = 300,000

2. At a price of $1,500:

   • Quantity Demanded: 500,000
   • Quantity Supplied: 500,000
   • Shortage: 500,000 - 500,000 = 0 (market equilibrium)

3. At a price of $2,000:

   • Quantity Demanded: 400,000
   • Quantity Supplied: 700,000
   • Shortage: 400,000 - 700,000 = -300,000 (surplus)

4. At a price of $2,500:

   • Quantity Demanded: 300,000
   • Quantity Supplied: 900,000
   • Shortage: 300,000 - 900,000 = -600,000 (surplus)

From the above analysis, we see that at a price of $1,000, there is indeed a shortage of 300,000 apartments.

A price ceiling is a maximum price that can be charged, which means the price cannot go above that ceiling, leading to shortages if the ceiling is set below the equilibrium price.

In this case, the price control that caused the shortage of 300,000 apartments is:

a price ceiling of $1,000 (or a price ceiling of 1,000 dollars) is correct.

So the correct choice is: a price ceiling of $1,000.