Determine the effect on the market of “watches”, by first showing the graph of demand and supply equilibrium, and how the 3 conditions affect the market of watches? Justify your points by proving it graphically.Current Equilibrium price of watches = $260Quantity demanded against the equilibrium = 500Condition 1: Price ceiling has been imposed by government = $200Condition 2: Price floor has been set to = $200Condition 3: If Price floor has been imposed by government of price = $300

The equilibrium price for a good or service is determined by the market forces of demand and supply.…

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Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 8PA

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Determine the effect on the market of “watches”, by first showing the graph of demand and supply equilibrium, and how the 3 conditions affect the market of watches? Justify your points by proving it graphically.

Current Equilibrium price of watches = $260
Quantity demanded against the equilibrium = 500
Condition 1: Price ceiling has been imposed by government = $200
Condition 2: Price floor has been set to = $200
Condition 3: If Price floor has been imposed by government of price = $300

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