Answer to Question #253501 in Economics of Enterprise for Ajjj

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 quantity of hamburgers demanded in the market is 60,000 which is higher than quantity supplied and sold of 40,000. When there is a higher demand than supply, there would be a shortage as the wants of consumers are not met. This may force prices to increase. A price ceiling of P 40 is below equilibrium price. When price ceiling is set below the equilibrium price, quantity demanded will exceed quantity supplied and this will lead to shortages in hamburgers.