BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

Solutions

Chapter
Section
BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

A low-income county decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at Chapter 3, Problem 57P, A low-income county decides to set a price ceiling on bread so it can make sure that bread is , example  1 At Chapter 3, Problem 57P, A low-income county decides to set a price ceiling on bread so it can make sure that bread is , example  2 At Chapter 3, Problem 57P, A low-income county decides to set a price ceiling on bread so it can make sure that bread is , example  3

Chapter 3, Problem 57P, A low-income county decides to set a price ceiling on bread so it can make sure that bread is , example  4

To determine

The effect of price ceiling on bread on the equilibrium price and equilibrium quantity.

Explanation

In the given question, the low-income country has decided to regulate the price ceiling so that a good (bread) can be affordable to the poor people. In the given table, the equilibrium price will be $2.80 where the quantity demanded is equal to the quantity supplied. So, the equilibrium quantity will be 7500.

If the government sets the price ceiling at $2.40, then at a price of $2.40, the quantity demanded is 8,000 and the quantity supplied is 6,400.

Excess demand = 8000 6400                         = 1600

The excess or shortage if the price ceiling is set at $2.40 is 1600 units.

In next case, the government sets the price ceiling at $2. At a price of $2, the quantity demanded is 8500 and the quantity supplied is 5500

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Use a production possibilities frontier to describe the idea of efficiency.

Brief Principles of Macroeconomics (MindTap Course List)

Define the term financial services.

Accounting Information Systems

SCENARIO ANALYSIS Your firm, Agrico Products, is considering a tractor that would have a cost of 36,000, would ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)