Economics (Book Only)
Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 4, Problem 3WNG
To determine

The price ceiling.

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Suppose that you decide to start a new business of making children’s ready-made garments. Make a (Hypothetical) linear supply schedule with 7 different price points and corresponding quantity supplied for your business. Make a graph showing equilibrium, shortage and surplus in the ready-made garments market. Give interpretation of this graph. Suppose cheap ready-made garments are imported from China. Draw a graph to show changes in equilibrium price and quantity for the Pakistani ready-made garments market. Give interpretation of this graph. Suppose that to boost the local industry, the Pakistani government gives subsidy on electricity prices. Draw a graph to show changes in equilibrium price and quantity. Give interpretation of this graph. Suppose that cheap cloth is imported from China for production of readymade garments and at the same time tourism in Pakistan increases bringing many more buyers of ready-made garments in the market. What will be impact on equilibrium price and…
Suppose the market for ensaimada is described by the following equations.   Qd = 1000 -50P Qs  = 500 + 50P where   Qd = quantity demanded Qs = quantity supplied P = price   Derive the equilibrium price and quantity for ensaimada. Will there be a shortage or surplus in the market if the price of ensaimada is equal to 4 pesos. Explain your answer. How large is the surplus or shortage?
In each of the following scenarios, explain the changes in either supply or demand that would result. If the initial equilibrium price were yet to change, indicate whether a surplus or a shortage would result. Given this, what do you expect will subsequently happen to the price of the good? In the market for paper: New advances in recycling technology reduce the cost of producing paper made from recycled materials. In the market for lightbulbs: Recently General Electric, one of the largest suppliers of light bulbs, decided to discontinue producing light bulbs. In the market for Las Vegas hotels: A heat wave in Las Vegas causes tourists to cancel their hotel room reservations and vacation elsewhere.
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