## Figure 6-1 Analysis### Graph Description:- **Axes**: - The vertical axis (P per unit) represents price in dollars, ranging from $0 to $100. - The horizontal axis (Quantity) represents the quantity of goods, ranging from 0 to 1000 units.- **Curves**: - **Supply Curve (S)**: Positively sloped, indicating that as price increases, the quantity supplied increases. - **Demand Curve (D)**: Negatively sloped, indicating that as price decreases, the quantity demanded increases.- **Equilibrium**: - The intersection of the supply and demand curves occurs at approximately $60 and 600 units. This point represents the market equilibrium where quantity supplied equals quantity demanded.### Question:Refer to Figure 6-1. Which of the following price controls would cause a shortage of 400 units of the good?### Options:- A price floor set at $30- A price floor set at $40- A price ceiling set at $60- A price ceiling set at $30### Explanation:- A **price ceiling** is a maximum allowable price, creating a shortage if set below the equilibrium price.- A **price floor** is a minimum allowable price, creating a surplus if set above the equilibrium price.To find the option that creates a **shortage** of 400 units, find a price ceiling below the equilibrium price of $60 where the quantity demanded exceeds the quantity supplied.

Price floor is a control which is set by the government to ensure that a minimum level of P(price)…

Figure 6-1 per unit $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 D 100 200 300 400 50 6ỗ0 700 800 900 1000 Quantity Refer to Figure 6-1. Which of the following price controls would cause a shortage of 400 units of the good? O a price floor set at $30 O a price floor set at $40 O a price ceiling set at $60 O a price ceiling set at $30

Figure 6-1 per unit $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 D 100 200 300 400 50 6ỗ0 700 800 900 1000 Quantity Refer to Figure 6-1. Which of the following price controls would cause a shortage of 400 units of the good? O a price floor set at $30 O a price floor set at $40 O a price ceiling set at $60 O a price ceiling set at $30

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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