If government set a maximum price of $45 in the market: a shortage of 21 units would arise. a surplus of 21 units would arise.

it would create neither a shortage nor a surplus

Explanation:

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Equilibrium price is the price at which quantity demanded equals quantity supplied. at this price the market is at equilibrium and quantity demanded equals the quantity supplied.

The equilibrium price in this question is $45. If the government sets the maximum price to be $45, there would neither be a shortage or surplus. the market would be in equilibrium.

If the government sets price above equilibrium price, it is a price floor and it leads to a surplus.

A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.

For example if the government sets price at $50, it would creates surplus. from the table we can see that quantity supplied exceeds quantity demanded.

If the government sets the maximum price below equilibrium price, it is a price ceiling and it leads to a shortage.

A price ceiling is when the government or an agency of the government sets the maximum price for a good or service. it is binding if it is set below equilibrium price.

If the government sets price at $30, it creates a shortage. from the table, we can see that quantity demanded exceeds quantity supplied

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