Share
Explore BrainMass

Price ceiling

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

Solution Preview

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 ...

Solution Summary

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.

$2.19