Refer to the accompanying figure,which shows both short-run and long-run demand and supply curves.If there is a $4 binding price ceiling imposed on a pharmaceutical drug,what will be the amount of the disequilibrium in the short run?

A) There will be a shortage of 1,500,000 units.
B) There will be a shortage of 800,000 units.
C) There will not be a shortage; there will be a surplus.
D) There will be a shortage of 2,000,000 units.
E) There will be a shortage 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 $4 binding price ceiling imposed on a pharmaceutical drug,what will be the amount of the disequilibrium in the short run?

A) There will be a shortage of 1,500,000 units. 
B) There will be a shortage of 800,000 units. 
C) There will not be a shortage; there will be a surplus. 
D) There will be a shortage of 2,000,000 units. 
E) There will be a shortage of 500,000 units.

Quizplus · Accepted Answer

At the price ceiling of $4, the quantity demanded (Qd) is 3,000,000 units and the quantity supplied (Qs) is 2,200,000 units. Therefore, there is a shortage of Qd - Qs =
3,000,000 - 2,200,000 = 800,000 units.

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