4. Currently the equilibrium price and quantity in the milk market are $4 per gallon and 100,000 gallons. The Price Elasticity of Demand is determined to be 0.80 while the Price Elasticity of Supply is determined to be 1.20. A price floor is set at 20% above the current equilibrium price. (a) Determine the dollar amount of the price floor. (b) Determine the Qs after the price is imposed. (c) Determine the Qd after the price is imposed.
4. Currently the equilibrium price and quantity in the milk market are $4 per gallon and 100,000 gallons. The Price Elasticity of Demand is determined to be 0.80 while the Price Elasticity of Supply is determined to be 1.20. A price floor is set at 20% above the current equilibrium price. (a) Determine the dollar amount of the price floor. (b) Determine the Qs after the price is imposed. (c) Determine the Qd after the price is imposed.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. Currently the equilibrium price and quantity in the milk market are $4 per gallon and
100,000 gallons. The Price Elasticity of Demand is determined to be 0.80 while the
Price Elasticity of Supply is determined to be 1.20. A price floor is set at 20% above the
current equilibrium price.
(a) Determine the dollar amount of the price floor.
(b) Determine the Qs after the price is imposed.
(c) Determine the Qd after the price is imposed.
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