CIMA BA1 · Chapter 5 · Question 6 of 10
Using the market in which Qd = 500 - 5P and Qs = -100 + 5P, the government imposes a maximum price of $50. What is the resulting shortage?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 100 units
Explanation
At P = $50: Qd = 500 - 5 x 50 = 250 units and Qs = -100 + 5 x 50 = 150 units. Shortage (excess demand) = 250 - 150 = 100 units.
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