Refer to the accompanying figure, which shows both short-run and long-run demand and supply curves. If there is a $x binding price floor imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run?
A) There will be a surplus of 1,500,000 units.
B) There will be a surplus of 800,000 units.
C) There will not be a surplus; there will be a shortage.
D) There will be a surplus of 2,000,000 units.
E) There will be a surplus of 500,000 units.

Question

Refer to the accompanying figure, which shows both short-run and long-run demand and supply curves. If there is a $x binding price floor imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run? 
A) There will be a surplus of 1,500,000 units. 
B) There will be a surplus of 800,000 units. 
C) There will not be a surplus; there will be a shortage. 
D) There will be a surplus of 2,000,000 units. 
E) There will be a surplus of 500,000 units.

Quizplus · Accepted Answer

At the price floor of $x, the quantity supplied in the short run will be 3,000,000 units (point B on the graph) and the quantity demanded will be 2,200,000 units (point A on the graph). This creates a surplus of 800,000 units.

Refer to the Accompanying Figure, Which Shows Both Short-Run and Long-Run