4. Now suppose that the government imposes a Price Floor equal to $8. As a result of this new policy, what is the quantity demanded? 5. What is the new quantity supplied? 6. As a result of this Price Floor, is there shortage or surplus, or is the price control non-binding?
4. Now suppose that the government imposes a Price Floor equal to $8. As a result of this new policy, what is the quantity demanded? 5. What is the new quantity supplied? 6. As a result of this Price Floor, is there shortage or surplus, or is the price control non-binding?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
4. Now suppose that the government imposes a
5. What is the new quantity supplied?
6. As a result of this Price Floor, is there shortage or surplus, or is the price control non-binding?
Transcribed Image Text:**Supply and Demand Curves for Soda**
**Use the following information to answer questions 2 through 7:**
The graph below shows the supply and demand curves for soda.
### Graph Explanation:
The graph plotted here illustrates the relationship between the price of soda (vertical axis) and the quantity of soda (horizontal axis). It contains two main lines:
- **Supply Curve:** This line shows the quantity of soda that producers are willing to sell at various prices. Typically, the supply curve slopes upward, indicating that as the price of soda increases, the quantity supplied also increases.
- **Demand Curve:** This line shows the quantity of soda that consumers are willing to buy at various prices. Generally, the demand curve slopes downward, indicating that as the price of soda decreases, the quantity demanded increases.
### Detailed Description:
- **X-Axis (Horizontal Axis):** Represents the Quantity of soda. It is marked with values from 1 to 13.
- **Y-Axis (Vertical Axis):** Represents the Price of soda. It is marked with values from 1 to 13.
- **Intersection Point:** The point where the supply and demand curves intersect is known as the equilibrium point. Here, the quantity of soda demanded equals the quantity supplied. On the graph, this equilibrium point occurs at the price of 6 and the quantity of 7.
Additionally, the graph mentions a "Price Floor." This is a minimum price set by the government or regulatory authority that must be paid for a good or service, in this case, soda. It is marked on the graph but does not intersect the equilibrium point, indicating it is above the equilibrium price.
Understanding this graph and the dynamics it represents is crucial in grasping the basic concepts of supply and demand in economics, and it will help you answer related questions accurately.
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