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EconomicsMicroeconomics

Price Ceiling at 8: Equilibrium, Quantity Traded, and Shortage

Find equilibrium at P = 10 and Q = 80, then apply a binding price ceiling of 8: 74 units traded and a 10-unit shortage.

Question

In a perfectly competitive market, quantity demanded is QD=100−2PQ_D=100-2P and quantity supplied is QS=50+3PQ_S=50+3P.

  1. Calculate the equilibrium price and quantity and plot the equilibrium.
  2. A price ceiling fixes the maximum permitted price at PC=8P_C=8. Calculate demand and supply at that price.
  3. Determine how many units are traded and quantify any shortage or surplus. On a supply-and-demand graph, mark the controlled price, traded quantity, and shortage or surplus.

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Evidence boundary

This is a standardized restatement and worked solution of University of Puget Sound ECON 102, §6.5.1 problem 6, including all three parts and both graph requirements. All numerical results follow from the supplied curves. Quantity traded equals the short side of the market under the usual model assumptions: an enforced ceiling, unchanged curves, and no additional intervention. No observed real-market outcome or allocation among buyers is supplied.