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A-Level Economics · Maximum price diagram question

Which distance shows the SHORTAGE the cap creates?

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The diagram

The answer

The distance F G. Qd 7 − Qs 3 = 4 units of unmet demand at the capped price — hence queues and waiting lists. Shortage = the horizontal gap AT the capped price: demanded (G) minus supplied (F) = 4 units. That gap is why price caps bring queues and black markets.

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This is one of 6 questions on the maximum price diagram — every corner lettered, every wrong answer diagnosed.

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