Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The number of units that would be exchanged in the market for good ABC at the price ceiling would be units.

Question Completion:

Exhibit 4-11  

Price of Good ABC     Quantity Demanded    Quantity Supplied

      $4                                          100                             40

        5                                           80                              80

       6                                            60                             110

       7                                            50                            160

Options:

a.20

b.40

c.100

d.60

The number of units that would be exchanged in the market for good ABC at the price ceiling would be units.

b.40

Explanation:

The suppliers of good ABC cannot sell above $4 since it is the price ceiling.  A price ceiling is the opposite of a price floor.  A price ceiling usually prevents the market of good ABC from reaching equilibrium as suppliers will be unwilling to supply more units of ABC.

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