Economics, Student Value Edition (7th Edition)
Economics, Student Value Edition (7th Edition)
7th Edition
ISBN: 9780134739229
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 4, Problem 4.3.2RQ
To determine

The impact of price floor and price ceiling on producers.

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Briefly explain, by means of examples, the difference between a maximum price and a minimum price.
In April 2021, there was shortage of ABC cement in the country which led to a rise in the price of ABC cement. The government then intended to put a price ceiling on cement in the country to minimize the loss to users of cement for construction purposes. Some people were of the view that “the fixing of a price ceiling for cement in the country will not have any effect”. Briefly discuss with the aid of an appropriate diagram, the effect of the imposition of price ceiling on ABC cement in the market.
Use the following graph to answer the question: how much is producer surplus? What is the total value to consumers of consuming the first ten units of this good?
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