Answer to Question #253490 in Economics of Enterprise for Jonaliza

Question

1. 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

At market price, the quantity supplied, which is 40,000 is equal to the quantity demanded.This is because the market is operating at equilibrium.

However, when a price ceiling of 40 is set, the quantity supplied is 60,000, This is because the price ceiling indicates a fall in price and hence quantity demanded will increase.