Answered: What mechanisms allocate resources when…

Business

Economics

What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 3QR

See similar textbooks

Related questions

Q: if the price ceiling of a good is set AT the Equalibrium Price, is it non binding?

A: Price ceiling is set by government above or below the equilibrium price when it wants to regulate…

Q: Supply and demand are powerful forces in a free market. In four to five sentences, explain some of…

A: It do agree that supply and demand are powerful forces in a free market. Shift in demand and supply…

Q: Which of the following is not a reason why negative consequences can result from efforts to control…

A: Price Controls are the limits set on the prices of goods and commodities by the government. For…

Q: Which policy increases the consumption of a good? a price floor/a price ceiling / a subsidy/ a tax

A: Consumption of goods and services is to satisfy the unlimited wants of the consumers. An increase in…

Q: A rise in supply and demand in equal proportion will result in

A: To find : What will happen when rise in supply and equal proportion

Q: An alternative way of thinking about the forces that cause markets to equlibrate in the real world…

A: A market is a place which exists in the two economic agents which includes the buyers and sellers as…

Q: An increase in supply and demand will lead to an increase in the equilibrium price and an…

A: An increase in demand and supply shifts the demand and supply curve towards right.

Q: Describe how equilibrium is found. Describe how a shift of the demand or supply curve can effect…

A: Answer: Equilibrium is the point where the quantity demanded and quantity supplied of a good is…

Q: Consider a minimum wage law -- a law where the government requires businesses pay at least a certain…

A: The equilibrium wage rate and the equilibrium quantity of labor achieve where the demand curve for…

Q: The difference between market demand and aggregate demand is that: Answers: A. Aggregate…

A: Market Demand can be defined as the sum total of the quantity demanded of a particular good by all…

Q: Why would a free market never operate at aquantity greater than the equilibrium quantity? Hint:What…

A: Supply and demand forces adjust in the market to determine the market equilibrium. The demand curve…

Q: Describe how government intervention affects the supply and demand equilibrium. by using the two…

A: By the term equilibrium, economists mean the demand and supply to be exactly equal. To address…

Q: Consider the supply at a price of $2. Quantity Demanded Market 12 Price Ying Som Fon Nam Gob Yam…

A: The law of supply states that there exists direct relation between price and quantity supplied…

Q: What happens if a government imposes price controls that require a selling price that is ABOVE the…

A: If a government imposes price controls that require a selling price that is above the equilibrium…

Q: There has been a great deal of movement of physicians across borders within the European Union, and…

A: Price ceiling is the price control imposed by the government. It is the limit on the maximum price…

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

A: Price floor refers to the legal minimum that can be charged for a good. It is set above the…

Q: Graphically show how each of the following shifts the supply curve. Also identify which factor of…

A: Supply curve is a graphical representation of the quantity of commodities or services supplied by…

Q: Does the price control mechanism (price floor and price sealing) to a resource shortage provide an…

A: Yes, the price mechanism gives a positive and negative feedback loop.

Q: Suppose a government imposes a price ceiling and price floor in the same market. If the price…

A: "Price ceiling is the maximum price that a seller can charge for a good or service." Price ceilings…

Q: What mechanisms allocate resources when the price of a good is not allowed to bring supply and…

A: Price floor: it is the minimum legal price set for a commodity or service by the government or an…

Q: Explain why economist usually oppose controls on prices.

A: The price ceiling sets the highest price of the service while the price floor puts the lowest price…

Q: When the government imposes a binding price floor,it causesa. the supply curve to shift to the…

A: When Govt. decides to set a new minimum level of price where firms have to sell goods then it is…

Q: Victoria is the food basket for Australia. In 2017, Victoria witnessed a severe drought that is…

A: Drought affects the supply of food, if there is a drought in Victoria then agricultural production…

Q: How does a price ceiling below equilibrium affect the market? How does a price ceiling above…

A: A price ceiling is the set limit on how much a seller can charge for a product or service. Price…

Q: A government decides to set a price ceiling on bread so that bread is affordable to the poor. The…

A: A market is a place where the buyers and sellers interact with each other and the exchange of goods…

Q: If the government enacts legislation which allows lenders to lower lending standards, the government…

A: The demand for the commodity depends on the purchasing power of a consumer. If the purchasing power…

Q: Why do most economists oppose price ceilings and price floor? What are their negative consequences?

A: The government determines the maximum price for a good or service. Price ceilings keep prices from…

Q: How does a tax on buyers affect the market equilibrium?

A: Suppose, there is a market in which the market equilibrium is attained at point E where the demand…

Q: . Explain why economists usually oppose price control

A: Price control is one type of restriction on the price(P) of goods in the market. A particular…

Q: Can the market / price mechanism find some solutions?

A: The price mechanism is a means by which the allocation of scarce resources is determined by the…

Q: With respect to supply and demand, please give a specific example where a supply and demand were…

A: The whole world demolished due to novel Covid-19 pandemic outbreak. The global lockdown was also…

Q: Illustrate on a supply and demand diagram how price ceilings may distort the market outcome, and…

A: Price control is defined as the measures adopted by the government to maintain the welfare of both…

Q: Suppose the market for hamburgers is unregulated. That is, hamburger prices are free to adjust based…

A: The interaction of the forces of demand and supply determines the equilibrium price and quantity of…

Q: Discuss how the equilibrium price and quantity change when a change in demand occurs and the supply…

Q: Explain why economists usually oppose controls on prices.

A: A price is a monetary amount paid to a commodities seller in exchange for the item. In other words,…

Q: People who study __________________ __________________ believe that flexible prices cause markets to…

A: According to the theory of flexible price, if there is excess of products or labor in the market,…

Q: Environmentalists and the president decide that Canada should reduce air pollution by reducing its…

A: Answer: Step 1: Suppose in the market of gasoline without tax, the price of gasoline is P and the…

Q: What can cause a price ceiling to become nonbinding?

A: Price controls are those government restrictions that are enforced to regulate the prices of goods…

Q: Governments continue to impose price controls. Which statement is NOT a valid explanation of this?…

A: THESE OPTIONS ARE WRONG A) Goverement authorities regularly ignore warnings about the results of…

Q: What are the possible reasons why the government may make a market intervention? What are the…

A: The intervention by the government is the action taken by the government which can change the…

Q: Why might producers argue for a price floor if it ends up making society worse off

A: Price floor is the least legal price of a good or service. Example of price floor minimum wage rate

Q: Consider the following supply and demand model. New Quantity Supplied Quantity Price Quantity…

A: The equilibrium price is such where the quantity demanded is equal to quantity supplied.

Question

What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction:

VIEW

Explanation:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Can the market / price mechanism find some solutions?
Generally speaking, what must occur in order for demand to shift? Supply to shift? How does the concept of the invisible hand help explain how markets reach equilibrium?
If people can't afford the equilibrium price for a good, would it be a good idea for the government to force the producer to produce it and give it to the poor people? Why or why not?
What are the possible reasons why the government may make a market intervention? What are the possible implications of such interventions? How might the wedge between consumers and firms lead to market distortions?
Which of the following is NOT a way that the government can intervene in markets? a)The government can set minimum wages. b)The government can raise taxes on a particular item. c)The government can pass laws on sales taxes. d)The government can stop the forces of demand and supply from working in markets.
Explain why economists usually oppose controls on prices.
Describe how a shift of the demand or supply curve can affect equilibrium
When a market is competitive and functioning properly, economic theory predicts that the market equilibrium will be efficient. However, this may not always be the desired outcome. Market outcomes may be unequal or distorted by market failure. Offer an example of a market where you consider the real-world outcome to be unacceptable. Why is the market outcome unacceptable? How can government policy improve on the market equilibrium? Will this solution create a surplus or shortage in the market according to economic theory? Explain. What effect will this solution have on consumer surplus, producer surplus, social surplus, and deadweight loss? Explain.
How does a market reach equilibrium without any outside intervention? Explain using the supply and demand concept.
can policy market interventions cause consumer or producer surplus? Explain why using specific reasoning.
How do prices communicate to economic actors?
After defining a ‘market mechanism’ and the ‘law of supply and demand’, explain how higher education can be affected by market changes, and how economic theory can understand such changes (Duff, 1997).