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Quantity Demanded Price Quantity Supplied 52 $50 73 62 45 62 72 40 51 82 35 42 92 30 33 If government set a minimum price of $50 in the market, a Multiple Choice surplus of 125 units would occur. surplus of 21 units would occur. shortage of 21 units would occur. shortage of 125 units would occur.

Respuesta :

Answer:

Surplus of 21 units would occur.

Explanation:

There are either of the two steps taken by the government:

(i) Price ceiling: This is a situation in which government sets the price below the equilibrium price level in the market.

(ii) Price floor: This is a situation in which government sets the price above the equilibrium price level in the market.

The equilibrium price occurs at a point where the quantity demanded is equal to the quantity supplied. Therefore, in our case, the equilibrium price is $45 where quantity demanded and quantity supplied are equal to 62 units.

Hence, the price set by the government is price floor.

At price floor of $50,

Quantity supplied = 73 units

Quantity demanded = 52 units

So, there is a surplus of (73 units - 52 units) = 21 units.

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