The government has set price ceiling on "whatever the product is", so that there is a shortage. That industry complains to the government that the ceiling price is far below the equilibrium price. The issues would be quality sold = quality bought, the amount customers are prepared to buy at the ceiling price Qd, is significantly higher than the amount producers are disposed to sell Qs.
The difference QD-QS represents the amount of the shortage. Even though consumers stipulate the amount Qd at price Pc, they can get only amount Qs for sale price. Thus Qs is the amount actually bought and sold, and the demand for the additional quality QD -QS goes unfulfilled© BrainMass Inc. brainmass.com October 25, 2018, 2:22 am ad1c9bdddf
The above statement is true. Since the price ceiling is set below the equilibrium price, the suppliers will only supply a limited amount which is not enough to meet the complete demand. However, in cases like this alternate markets usually start sprawling. There is unmet demand of Qd-Qs as stated above. The suppliers can supply those goods if the price is higher. So alternate ...
The solution goes into a great amount of detail related to the Price ceiling question being asked. The solution is very easy to follow along and can be easily understood by anyone with a basic understanding of the concepts. The solution answers all the question(s) being asked in a succinct way. Overall, an excellent response.
price floor or a price ceiling
Whenever you have a problem with a price floor or a price ceiling, do not assume that it will always be effective. This solution will address how to determine if a price floor or ceiling is effective or not, what it looks like, it's purpose, and how to determine whether you need to use a price floor or a price ceiling in a given situation.View Full Posting Details