Questions: 5. The market is currently at equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity demanded change? a. It would increase by 12,000 units. b. It would increase by 30,500 units. c. It would decrease by 30,500 units. d. It would increase by 30,000 units. e. It would decrease by 12,000 units. 6. The market is currently at equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity supplied change? a. It would increase by 32,000 units. b. It would decrease by 30,000 units. c. It would decrease by 18,000 units. d. It would decrease by 32,000 units. e. It would decrease by 30,500 units.

5. The market is currently at equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity demanded change? a. It would increase by 12,000 units. b. It would increase by 30,500 units. c. It would decrease by 30,500 units. d. It would increase by 30,000 units. e. It would decrease by 12,000 units. 6. The market is currently at equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity supplied change? a. It would increase by 32,000 units. b. It would decrease by 30,000 units. c. It would decrease by 18,000 units. d. It would decrease by 32,000 units. e. It would decrease by 30,500 units.
Transcript text: 5. The market is currently at equilibrium. If a binding price ceiling of $P_{1}$ is imposed, by how much would the quantity demanded change? a. It would increase by 12,000 units. b. It would increase by 30,500 units. c. It would decrease by 30,500 units. d. It would increase by 30,000 units. e. It would decrease by 12,000 units. 6. The market is currently at equilibrium. If a binding price ceiling of $\mathrm{P}_{1}$ is imposed, by how much would the quantity supplied change? a. It would increase by 32,000 units. b. It would decrease by 30,000 units. c. It would decrease by 18,000 units. d. It would decrease by 32,000 units. e. It would decrease by 30,500 units.
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Solution

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Solution Steps

Step 1: Find the quantity demanded at equilibrium

The equilibrium point is where supply and demand intersect. This occurs at P2 and a quantity of 68,000.

Step 2: Find the quantity demanded at price P1

At price P1, the quantity demanded is 80,000.

Step 3: Calculate the change in quantity demanded

The change in quantity demanded is 80,000 - 68,000 = 12,000. The quantity demanded _increases_ by 12,000 units.

Final Answer:

The quantity demanded would increase by 12,000 units (a).

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