Question

The table gives the demand and supply schedules for college meals. 

If the college put a price ceiling on meals at $4 a meal, what is the quantity bought, the shortage of meals, and the maximum price that someone is willing to pay for the last meal available? 

 If the college put a price ceiling on meals at $4 a meal, the quantity of meals bought is _______  meals a week. 

 The shortage created is _______  a week. 

 The maximum price that someone is willing to pay for the last meal available is $_______  .

Answer 1

(1) When price = $4, quantity demanded (Qd) = 3,000 and quantity supplied (Qs) = 1,500.

Since consumers can buy only what producers will sell, market quantity = 1,500.

Shortage = Qd - Qs = 3,000 - 1,500 = 1,500

(2) Maximum price that someone is willing to pay is $8.