3. In the late eighteenth century, the price of bread in New York City was controlled, set at a predetermined price. Bread could only be sold at that exact price. a. Draw a diagram showing the effect of the policy. Did the policy act as a price ceiling or a price floor? b. What kinds of inefficiencies were likely to have arisen when the controlled price of bread was above the market price? Explain in detail. One year during this period, a poor wheat harvest caused a leftward shift in the supply of bread and therefore an increase in its market price. New York bakers found that the controlled price of bread in New York was below the market price. c. Draw a diagram showing the effect of the price control on the market for bread during this one - year period. Did the policy act as a price ceiling or a price floor? d. What kinds of inefficiencies do you think occurred during this period? Explain in detail.

3. In the late eighteenth century, the price of bread in New York City was controlled, set at a predetermined price. Bread could only be sold at that exact price. a. Draw a diagram showing the effect of the policy. Did the policy act as a price ceiling or a price floor? b. What kinds of inefficiencies were likely to have arisen when the controlled price of bread was above the market price? Explain in detail. One year during this period, a poor wheat harvest caused a leftward shift in the supply of bread and therefore an increase in its market price. New York bakers found that the controlled price of bread in New York was below the market price. c. Draw a diagram showing the effect of the price control on the market for bread during this one - year period. Did the policy act as a price ceiling or a price floor? d. What kinds of inefficiencies do you think occurred during this period? Explain in detail.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to the above table. If the government implemented a price control at $20 which of the following is true?
b. Prices in most market are free to rise or fall to their equilibrium levels, no matter how high or low those levels might be. However, government sometimes concludes that supply and demand will produce prices that are unfairly high for buyers or unfairly low for sellers. So, government may place legal limits on how high or low a price or prices may go. With the rapidly rising of the crude oil price, it caused to increase in gasoline price and lead to increase the equilibrium price in the market. This rapidly rising price of gasoline greatly burdens low- and middle-income household. Analyse how government policy can adjust on this situation to keep gasoline remain affordable for these household.
d. 28. Soda is produced in the market shown in the graph below. Answer the following questions based on the information given in the graph. Price per case 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 S D 8 9 10 Quantity (millions of cases) A. To reduce the consumption of soda, suppose the government places-a $2 per unit tax. i. Will the price of soda increase by the full amount of the tax? Explain. ii. Calculate the tax revenue the government collects from the sale of soda. Show your work. iii. Will consumer surplus increase, decrease, or remain the same after the sales tax? iv. Calculate the deadweight loss created by the tax. Show your work. B. Suppose that instead of imposing a per unit tax, the government sets a price ceiling of $7. Identify the quantity of soda that will be exchanged in the market as a result of the price ceiling. Explain.
What is the difference between a price ceiling and a price floor? If a price ceiling for a good is set below the market equilibrium, what will happen to the quality and future avail- ability of the good? Explain.
Above is the supply and demand graph in a market. Answer the following questions based on the graph: 3.1. What are the equilibrium price and quantity in the market? 3.2. What are the quantity supplied, quantity demanded, and price at a shortage of 400 units? 3.3. Whar are the quantity supplied, quantity demanded, and price at a surplus of 200 units?
Problem 4. From number 2, draw another graph and call equilibrium Point A. Illustrate on the graph what will happen to the Supply curve when producers enter the market? Does the question refer to an increase, need help understanding the question.
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
Suppose the government forces the price to be below the equilibrium. Is this called a price floor or a price ceiling? Explain why the government might do this and the likely economic impact of the price floor or ceiling. Then, explain how market forces will attempt to move the market price to equilibrium.
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1. Assume that if drugs (like marijuana, cocaine and heroin) were legalized, the supply curve would shift down and to the right because the business of drugs would become less risky and less expensive. a. Would you expect the demand curve to shift if drugs were legalized? Why or why not? b. Given the supply shift and your answer to (a), what would happen to the drug price and quantity consumed if legalized? Use a graph to illustrate your answer. c. Although it is difficult to empirically test, many people believe that thedemand for drugs is price inelastic for addicted users and price elastic foryoung or occasional, recreational users. Show graphically what wouldhappen to the total revenue of drug sellers whose customers are addicted and of sellers whose customers are casual users. Assume that drug sellers can be separated by their customer type. Also assume that the demand curve does not shift when drugs are legalized.
b. Given the following individual demand and supply schedules for pen and answer the following the questions using completely labeled graph for each part. Demand by Price Demand by Ali Supply by Piano Supply by Parker Eman 10 500 750 100 350 20 400 650 200 450 30 300 550 300 550 40 200 450 400 650 50 100 350 500 750 i. Graph the demand and supply curves. What is the equilibrium price and quantity in the market for pens? ii. Suppose, if the price of the pen is fixed at 40 and 10, analyze its impact on the market for pens.
1.Discuss an alternative method of solving price gouging. Use diagrams to support your discussion. 2.Would the imposition of a price ceiling be an effective solution to price gouging.