the ruritanian ministry Health has discovered that wodgets , the biological cous

Question

the ruritanian ministry Health has discovered that wodgets , the biological cousin to widgets 1159 PM 4 010 3 Time Remaining: 45 M 19 s of 6 pling Learning Map The Ruritanian Ministry of Health has discovered that wodgets, a biological cousin to widgets, have mportant positive side effects. To ensure that all Ruritanian citizens can afford to buy set a ceiling price of 2 kroner per wodget. Not surprisingly, since the equilibrium price is 4 kroner, a black market has developed for wodgets. 0 ts, they have Supply What is the quantity supplied of wodgets at 2 kroner? Number wodgets 5 What is the excess supply at a price of 2 kroner? Number wodgets Price Ceilling How many wodgets will black marketeers supply? 5 10152025 30 3540 45 505560 65707580 8590 95100 Number Quantity of Wodgets wodgets Previous Check Answer Next ?? Exit

Explanation / Answer

Consider the given problem shows the demand and supply of “wodgets”. So, here the equilibrium price is “P=4” and the quantity traded is “50”. Now, as the price is ceiled at “P=2”, => at “P=2” the corresponding quantity supplied is “25” from the supply curve.

Now, at “P=2” the corresponding demand is “80” from the demand curve, => there is an excess demand of “80-25=55”. So, the size of the “excess supply” is “-55”.

Now as the equilibrium price is more than “2”, => the black market will supply “50-25 = 25” units of wodgets. The difference between “equilibrium quantity” and “actual quantity supplied”.

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