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QUESTION 20 5 points Suppose policymakers decide to impose a price ceiling on a good because they think the market-determined price is too high. If the government imposes the price ceiling below the equilibrium price, as the government of Venezuela is currently doing in many markets including the market for food, (choose all correct answers) A surplus will arise at the new lower price. A shortage will arise at the new lower price Consumers will waste a lot of time searching for the good, which has become much more scarce than before the price ceiling was imposed. 3 producers will respond to the lower price by offering fewer units for sale every period. consumers will be able to purchase more of the good after the price ceiling is imposed.
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Answer: 2ad and 4th options are correct This is the price of commodity set by the govemment lower the market equilibrium price Such price gives assistant to the consumers who are otherwise purchasing goods at higher price Price Supply P1 Demand Q1 Q Quantity or units The equilibrium point is E, where the demand curve and supply curves intersect; the corresponding equilibrium price is P and quantity is Q. The govemment may think that such price is very high; therefore, a price ceiling is imposed at P1. Since this is applied, there is higher demand than supply; the line segment (LM indicates shortage (2d option) uantitv of suppy is lower, since O1 is less quantitv than O (4th option Other options are not correct Option 1: There is no surplus but shortage Option 3: Since the price is drop, there should not be any further searching Option 5: Customers cant purchase more, since the supply is restricted only Q1

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