An effective price ceiling is one that causes the market to ______________________when it is imposed. * stay at equilibrium move away from equilibrium move closer to equilibrium nothing can be said without additional information
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- Question 16 Refer the to graph below to answer Questions 16-18 In the graph above, if the minimum price is set at P1, what area(s) represent the producer surplus after the implementation of this policy? Question 16 options: a) Areas B+C+E+F b) Areas B+E c) Areas E+F d) Area E e) Area B Question 17 In the graph above, if the minimum price is set at P1, what will limit the quantity of the good that is sold? Question 17 options: a) Demand b) Supply c) A government quota d) Consumer surplus e) Producer surplus Question 18 In the graph above, if the minimum price is set at P1, what area(s)…The government introduces a binding price floor on a market. As a result of this price floor the quantity actually bought and sold on the market will: A. Increase in comparison to initial equilibrium without a price floor B. Decrease in comparison to initial equilibrium without a price floor C. Stay the same as in initial equilibrium without a price floorA price floor is a price? A. that creates a surplus of the good if it is set above the equilibrium price. B. above which a seller cannot legally sell. C. below which a seller cannot legally sell. D. Both answers A and C are correct.
- The price cap concept is one of the possible government interventions in the market and means that it is the price level at which a company must sell its product, which must be below the market equilibrium price. True or FalseWhat is a black market? Group of answer choices It is an illegal market that emerges when binding price ceilings or when binding price floors are in place. It is an illegal market that emerges when binding price ceilings are in place. It is an illegal market that emerges when binding and nonbinding price controls are in place. It is an illegal market that emerges when no price controls are present. It is an illegal market that emerges when binding price floors are in place.The market demand is given by P=250-2Q and the market supply by P=40+Q. What will be the shortage on the market, if a price ceiling of 77 is being implemented?
- MR PD Smith has heard that the government has proposed the imposition of a maximum price or price ceiling in the market for his product. He does not understand the implications of this proposed price ceiling on equilibrium in the market and has asked you to provide some clarity. The manufacturer would like to know the following: Is there a better alternative to imposing a price ceiling?A binding price floor will, in the short run, Group of answer choices push the price down as a result of the surplus. create a shortage of the good or service. shift the supply curve to the right. shift the demand curve to the left. increase the quantity supplied and decrease the quantity demanded.If a price floor is lower than market equilibrium... a. Demand will be greater than supply and there will be a shortage b. Supply will be greater than Demand and there will be a surplus c. Demand will be greater than supply and there will be a surplus d. There will be no effect because the floor is lower than market equilibrium
- Market Demand: P_D=25 -2Q_D Market Supply: P_S=5 + 2Q_S Solve for the equilibrium price given the following demand and supply functions. If a government subsidy induces producers consider increasing supply by 2 more units. How will this affect the price and quantity of product consumed? (Please draw the original and new curves on the same graph)A binding price ceiling will have which of the following consequences? Group of answer choices There are no consequences to a binding price ceiling. The quantity supplied will always exceed the quantity demanded. There will be downward pressure on prices until quantity demanded equals quantity supplied. There will be upward pressure on prices until quantity demanded equals quantity supplied. The quantity demanded will always equal the quantity supplied.A price ceiling will have the largest effect: a. substantially below the equilibrium price b. slightly below the equilibrium price c. substantially above the equilibrium price d. slightly above the equilibrium price. Sketch all four of these possibilities on a demand and supply diagram to illustrate your answer. Select the correct answer. A price floor will usually shift: a. demand b. supply c. both d. neither Illustrate your answer with a diagram.