Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter P2, Problem 8KC
To determine
The example for
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In India, to protect the farmers from the low price, the government decided to increase the price of farm products. Accordingly, the government increased the price and fixed the price above the equilibrium price. What do you call this type of pricing?
a.
Price ceiling
b.
Market price
c.
Maximum price
d.
Price floor
What is the difference between a price floor and a price ceiling?
Which causes a shortage of a good—a price ceiling ora price floor? Justify your answer with a graph
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- Define price ceiling and price floor and give an example of each. Which leads to shortage and which leads to shortage?arrow_forwardHello, I have a problem to solve in my macroeconomics class, I am so lost to begin with, and I would like help •Using the Supply and Demand Model •Starting from a point of equilibrium demonstrate and explain the effect on Price and Quantity Use the 5 step process from class •A. Government wishes to create a minimum wage by creating a minimum wage of $10.00 when the market for unskilled labor is $5.00 •B. Government wants to solve affordable housing by making the maximum rent $2,000 for an apartment in NYC, when the market rent is $3,500 •Has the principle of the government can sometimes make the market better off been realized with these two policies? •How can the Government increase market wages and decrease market rents without harm to the market?arrow_forwardThe government of Brazil wishes to regulate the grocery bags by preventing the current prices from rising, what actions should it take? * a. Set a price ceiling above the equilibrium price b. Impose a direct tax on landlords c. Grant a subsidy to landlords d. Set a price ceiling below the equilibrium pricearrow_forward
- In 1991 the price of milk fell sharply. Senator Patrick Leahy of Vermont (a big milk-producing state) got Congress to pass a law putting a price floor on the price of milk. The equilibrium price was $11.47 per hundred pounds of milk; the price floor was $13.09 per hundred pounds. What effects did this price floor have? Whom did it help? Whom did it hurt?arrow_forwardExplain what would be likely to happen if the government placed a price floor on milk. Suppose that the price of milk is $4/gallon, and the government prohibits anyone from selling milk for less than $5/gallon. Your answer should consist of a complete well-written paragraph using complete sentences as well as a supply and demand diagram.arrow_forward
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