The table gives the supply and demand schedules in a market for apartments. A government price control is implemented that results in a shortage of 300,000 apartments. Which price control must have been used?

Question

O a price ceiling of $2, 000
O a price floor of $2, 000
O a price ceiling of $1, 000
O a price floor of $1, 000

Answer 1

Based on the information given, a price ceiling of $1,000 must have been used. A price ceiling is a maximum price set by the government, which in this case would restrict the price of apartments to no more than $1,000. This would result in a shortage of 300,000 apartments because the quantity demanded at that price would exceed the quantity supplied.