1 multiple choice 10 points imagine that the government set a price ceiling at the price of $2, as shown…

1 multiple choice 10 points imagine that the government set a price ceiling at the price of $2, as shown below. which of the following statements is true? milk price per gallon $3 $2 demand 20 30 40 quantity (millions of gallons) a shortage will occur, the quantity demanded is higher than the quantity supplied at $2 there is not enough information on the graph to tell a surplus will occur, the quantity supplied is higher than the quantity demanded at $2 it will not change anything, the equilibrium price is already $2

1 multiple choice 10 points imagine that the government set a price ceiling at the price of $2, as shown below. which of the following statements is true? milk price per gallon $3 $2 demand 20 30 40 quantity (millions of gallons) a shortage will occur, the quantity demanded is higher than the quantity supplied at $2 there is not enough information on the graph to tell a surplus will occur, the quantity supplied is higher than the quantity demanded at $2 it will not change anything, the equilibrium price is already $2

Answer

Brief Explanations:

A price - ceiling is a legal maximum price. When the price ceiling is set below the equilibrium price, the quantity demanded exceeds the quantity supplied, leading to a shortage. In the graph, at the price - ceiling of $2, the demand curve is to the right of the supply curve, indicating higher quantity demanded than quantity supplied.

Answer:

A. A shortage will occur, the quantity demanded is higher than the quantity supplied at $2