Quantity Demanded Price Quantity Supplied 52 $50 73 62 45 62 72 40 51 82 35 42 92 30 33 If government set a minimum price of $50 in the market, a Multiple Choice surplus of 125 units would occur. surplus of 21 units would occur. shortage of 21 units would occur. shortage of 125 units would occur.

Surplus of 21 units would occur.

Explanation:

There are either of the two steps taken by the government:

(i) Price ceiling: This is a situation in which government sets the price below the equilibrium price level in the market.

(ii) Price floor: This is a situation in which government sets the price above the equilibrium price level in the market.

The equilibrium price occurs at a point where the quantity demanded is equal to the quantity supplied. Therefore, in our case, the equilibrium price is $45 where quantity demanded and quantity supplied are equal to 62 units.

Hence, the price set by the government is price floor.

At price floor of $50,

Quantity supplied = 73 units

Quantity demanded = 52 units

So, there is a surplus of (73 units - 52 units) = 21 units.