Assume that the government sets a binding price celling on the interest rate that banks charge on loans Explain carefully the impact of this policy on the financial markets. Assume that the government sets a price floor in the market for wheat and the price floor is set below the market equilibrium of wheat. Discuss carefully the effectiveness of this policy on the market.

Assume that the government sets a binding price celling on the interest rate that banks charge on loans Explain carefully the impact of this policy on the financial markets. Assume that the government sets a price floor in the market for wheat and the price floor is set below the market equilibrium of wheat. Discuss carefully the effectiveness of this policy on the market.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 2PA

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Assume that the government sets a binding price ceiling on the interest rate that banks charge on loans.Explain carefully the impact of this policy on the financial markets. Assume that the government sets a price floor in the market for wheat and the price floor is set below themarket equilibrium of wheat. Discuss carefully the effectiveness of this policy on the market
Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world's sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption. (i)Discuss the effect on the markets for each of the three products if thegovernment implements a price restriction in the sugar cane market with the aim of protecting the farmers. How will this impact the revenues for sugar growers, rum producers and whiskey producers?
Consider an economy where many farmers plant and sell sugar cane for a living. (a) Discuss the welfare effects when the government implements a price floor in the sugar cane market to help the sugar cane farmers. Support your answers with a suitable sugar cane market diagram. Are the sugar cane farmers better off with this policy? Explain. (b) How would your answer be different if the government commits to buy up all the sugar cane at the floor price from the farmers and sell to the consumers at a lower price to clear the stock? Discuss and support your answers with a suitable sugar cane market diagram.
Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium(i.e., supply equals demand in each case). Assume further that a good harvest impactsthe world’s sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption. (b) Discuss the effect on the markets for each of the three products if thegovernment implements a price restriction in the sugar cane market with the aim of protecting the farmers. How will this impact the revenues for sugar growers, rum producers, and whiskey producers?
assume that as the economy booms, the demand for business and consumer loans rises significantly while the supply of funds and loans remains constant. As a result, the market interest rate for business and consumer loans rises to 20% per year. The government implements a ceiling on interest rates of 15% ab year and as a result options: 1.a greater number of business and consumer loans are made at a lower interest rate than previously 2. the quantity demanded of business and consumer loans rises, while the quantity supplied falls and a surplus occurs 3. the demand of business and consumer loans rises, while the supply falls and a shortage occurs 4. the quantity demanded of business and consumer loans rised, while the quantity supplied falls and a shortage occurs
4. The rent control agency of Rochester has found that aggregate demand is P = 500 – 5QD. Quantity, QD, is measured in thousands of apartments. Price, P, equals the monthly rental rate in dollars. The city’s board of realtors acknowledges that this is a good demand estimate and has shown that supply can be expressed as P = 5QS. a. If the agency and the board are right about demand and supply, respectively, what is the free-market price? How many apartments are rented? B. If we assume an average of 3 persons per apartment, what is the expected change in city population if the agency sets a maximum average monthly rent of $100 and all those who cannot find an apartment leave the city?
Please answer in paragraphs. Rate wil be given! What would happen if the government imposes a price ceiling on oil and gas prices, how would this affect the market in terms of demand and supply? Would this work?
please show all workingQuestion 1 (a) Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey.Rum and whiskey are substitutes in consumption. The government implements a price restriction in the sugar cane market with the aim of protecting the farmers.(i) What type of price restriction is implemented by the government? Explain. (ii) Discuss the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. (iii) Illustrate the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers.
(a) Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world’s sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption.(i) Discuss the impact of the good harvest on each of the three markets.(ii) Discuss the effect on the markets for each of the three products if thegovernment implements a price restriction in the sugar cane market with the aim of protecting the farmers. How will this impact the revenues for sugar growers,rum producers and whiskey producers? (b) Identify a newspaper article that illustrates a market failure in Barbados. NOTE: Only the following market failures should be examined: public good,asymmetric information, positive or negative externality.(i) Provide a brief summary of the main points in the article. (Maximum 30 words)(ii)Identify the type of…
4. We say that rent stabilization creates rationing because . . .(a) Those who are in rent stabilized housing are issued ration booklets which they use to pay therent. (b) Some people don’t want to live in rent stabilized apartments because they tend to be old (pre- 1974).(c) So long as rent stabilization keeps rents below the market level, demand must exceed supply,which is the very definition of rationing.(d) Supply will not be at its first best level.(e) So long as rent stabilization keeps rents below the market level, the intervention in the marketkeeps some sellers from reaching buyers, meaning there is excess supply
use diagramsa. What is the effect on the equilibrium price and quantity traded in market of theintroduction of a new technology that reduces costs of production for all firms?b. What is the effect on the equilibrium price and quantity traded in a market of a changein tastes that reduces the demand for the product?c. What is the effect on the equilibrium price and quantity traded in a market of theimposition of a tax per unit sold on suppliers?d. What is the effect on the equilibrium price and quantity traded in a market of thepayment of a subsidy per unit sold paid to suppliers?
Consider the market for corn. Suppose that right now, the equilibrium price is considered “too low” by farmers (i.e. suppliers) in order to make a living. These farmers go to their state representatives and convince them to enact a price floor that is above the equilibrium price. Depict this situation graphically. Is there a shortage or a surplus (or does nothing happen)? Now, conceptually, describe how we know with certainty, that consumers are harmed by this policy. Then, describe conceptually how farmers may be harmed or may benefit from this policy. Graphically depict how we know that consumers are harmed while farmers may be better or worse off (ambiguous). If we were to consider the “total surplus” of consumers and farmers, can we say with certainty whether this economy is better or worse off from the price floor?