Question

Supply $60- Price Demand 50 200 100 150 Quantity Refer to the diagram. A price of $20 in this market will result in a

Answer 1

Answer
there will be a shortage of 100 units
or
the price will increase
or
shortage will decrease
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the market is in equilibrium at Qd=Qs
where
Q=150 and P=40
but the price of $20 is in a market which is lower than the equilibrium price so there is a shortage as
Qd=200 and Qs=100
Shortage =Qd-Qs=200-100=100 units

if there is no price ceiling then the shortage will push the price above up to the equilibrium price.