Gce Model Questions Vol1 2017 Economics Question 20

Practice objective / multiple choice question 20 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Easy Difficulty
Question 20 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

The market for wheat is initially in equilibrium at price \(\£2\) per kg and quantity 5,000 kg. The demand curve is \(Q_d = 8{,}000 - 2{,}000P\) and the supply curve is \(Q_s = 1{,}000P\). The government introduces a price ceiling of \(\£1.5\) per kg. Calculate the resulting shortage (in kg) and briefly explain the likely market outcome.

Answer Options

A. Shortage = 3,500 kg; the market will experience a surplus leading to downward pressure on price.
B. Shortage = 4,500 kg; the market will experience a shortage leading to rationing or black‑market activity.
C. Shortage = 2,000 kg; the market will experience a shortage leading to rationing or black‑market activity.
Correct Answer D. Shortage = 3,500 kg; the market will experience a shortage leading to rationing or black‑market activity.
Correct Answer
D
Correct Option:
Shortage = 3,500 kg; the market will experience a shortage leading to rationing or black‑market activity.

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 20. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Easy .

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