Frice $45 $20- $16. $14 $10 45 50 55 70 85 Quantity (millions of crates)

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter2: The One Lesson Of Business
Section: Chapter Questions
Problem 2.1IP
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The figure below illustrates the market for Washington apples after the government imposes a price floor of $20 per crate of apples

How many crates of apples were sold before the price floor?     million crates

How many crates of apples will be demanded after a binding price floor is set?     million crates

How many crates of apples will be supplied after a binding price floor is set?     million crates

How many crates of apples will be sold after the price floor?     million crates

What is the size of the shortage or surplus?     million crates

 

Price
$45
$20
$16
$14
$10
45
50 55
70 85
Quantity
(millions of crates)
Transcribed Image Text:Price $45 $20 $16 $14 $10 45 50 55 70 85 Quantity (millions of crates)
Expert Solution
Step 1

Price floor refers to the legal minimum that can be charged for a good. It is set above the equilibrium level.

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