(Figure: Understanding Price Ceilings and Floors) In the graph, a maximum price of $90 would allow for a binding price ceiling. 90 75 50 25 10 200 500 800 False True
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- If the price ceiling is effective (on N95 masks), will it be above or below the market equilibrium price of $200? a) Above b) below I think the answer A (above) because when I think of price ceiling I think on top. But I'm not sure that is right.a. Suppose the market supply for Good X is given by QXS = -100 + 5P Compute and illustrate with completely labelled diagram the producer surplus if the equilibrium price of X is $100 per unit (show the relevant calculation). b. The daily market demand and supply for chicken in Kuala Lumpur is given by: = 16,000 – 1,000P = 2,000 + 1,000P The quantity and price are measured in tonnes and RM, respectively. i. Determine the equilibrium quantity and price in the above market, ii. Explain what will happen if the government imposes a price ceiling of RM10 on the chicken.12 . Problems and Applications Q10 A market is described by the following supply and demand curves: QSQS = = 3P3P QDQD = = 400−P400−P The equilibrium price is and the equilibrium quantity is . Suppose the government imposes a price ceiling of $80. This price ceiling is , and the market price will be . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $80 will result in . Suppose the government imposes a price floor of $80. This price floor is , and the market price will be . The quantity supplied will be and the quantity demanded will be . Therefore, a price floor of $80 will result in . Instead of a price control, the government levies a tax on producers of $40. As a result, the new supply curve is: QSQS = = 3(P−40)3P−40 With this tax, the market price will be , the quantity supplied will be , and the quantity demanded will be . The passage…
- Find the equilibrium price and quantity for the following markets : Qs = - 45 + 8P Qd = 125 – 2PConcerned about the political fallout from rising gas prices, suppose that the U.S. government imposes a price ceiling of $3.00 a gallon on gasoline. Explain how the market for gasoline would react to this price ceiling if a global shortage of oil sent the equilibrium price of gasoline to $3.50 a gallon. Would the U.S. gasoline market be efficient?Refer to the table in question 8. Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the government to establish this price ceiling? Explain carefully the main effects. Demonstrate your answer graphically. Next, suppose that the government establishes a price flfloor of $4.60 for wheat. What will be the main effects of this price flfloor? Demonstrate your answer graphically.
- Question 42 If a binding price floor is imposed on the drone market, then the demand for drones will decrease. O the supply of drones will increase. O a surplus of drones will develop. a shortage of drones will develop. hsFor a price ceiling to be binding, it must be set Choose one: A. below the equilibrium price. B. either above or below the equilibrium price. C. above the equilibrium price. D. at the equilibrium price.Referring to question 2: Suppose the government imposes a $40 price floor. If this price floor is binding, it would lead to a ____ of _____ units of output in the market. Group of answer choices shortage; 100 shortage; 200 surplus; 100 surplus; 200
- A $3 per unit subsidy has been granted on a commodity. If the demand of that commodity is QD=99-1P and QS=3+2P. Calculate the equilibrium price(s) and quantity after the subsidy.A1-1. Imagine that a market for a good is characterized by the following supply and demand equations: QS = –35 + 35P QD =100 – 10P where QS and QD are quantities in units and P is the price per unit. (a) Graph the supply and demand curves with quantity on the horizontal and price on the vertical axis. Be sure to calculate the P and Q intercepts for demand and the P intercept for supply. Calculate and illustrate the equilibrium price and quantity. [Hint: Show your work.] (b) Calculate both the demand and supply elasticity around the equilibrium point. [Hint: you can use either the point method or the average arc (midpoint) method.] (c) If a regulator imposes a quantity restriction by granting quotas for 60 units of output to existing producers, what is the new price and quantity traded? Does this policy create deadweight loss (DWL) in the market? Briefly explain and identify any DWL in your diagram. (d) What is the value of a unit of quota? Illustrate in your diagram.…Consider each scenario independently. In each of the following cases tell me, using verbal and graphical analysis (g) A tax on gun buyers. (h) A binding price floor on guns.
