Answer to Question #253050 in Economics of Enterprise for riveraaryan

Question

With the price ceiling set P 40, the number of hamburgers that buyers want to buy is 60,000. But the number of hamburgers that is actually bought and sold in the hamburger is only 40,000. Why does the quantity supplied determine the quantity bought and sold in the market? 

Answer 1

The number of hamburgers demanded in market is 60,000. But actually sold in the market is 40,000. This means quantity supplied in the market is less than quantity demanded that leads to shortage of hamburgers. The price ceiling sets at P 40 that is below the equilibrium price. A price ceiling below the equilibrium price often leads to shortage of the commodity. Based on this, it can say that price ceiling forces producers to reduce the supply of hamburgers in the market. Due to this, actual sale of hamburgers is lower than quantity demanded.