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

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

Answer 1

To determine which price control results in a shortage of 300,000 apartments, we need to analyze the supply and demand data at different price points. A shortage occurs when the quantity demanded exceeds the quantity supplied.

Looking at the table:

• At $1,000:

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

• At $1,500:

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

• At $2,000:

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

• At $2,500:

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

Since a shortage of 300,000 apartments occurs specifically at the price of $1,000, it indicates that the government has implemented a price ceiling at this level to keep prices low.

Thus, the correct answer is:

a price ceiling of $1,000.