8. Consider the following demand and supply functions in a pizza market: Q = 20,000-1000P and Qs = 2000P10,000 where Q is the quantity of slices of pizza and P is the price per slice of pizza. Let's assume that the city council a price control regulation on price of every slice of pizza to make it affordable for students. Let's say this price ceiling is set at $8 per slice. a. Is this price ceiling binding? If yes, what problem will it create in the market? Is there any excess demand/ supply? If yes, then identify its magnitude.hanom b. Draw the above market with its equilibrium price, price ceiling (P) and point out the equilibrium quantities at these prices. c. Perform a graphical analysis of CS of buyers before and after the ceiling. Can you say if they are better off?

8. Consider the following demand and supply functions in a pizza market: Q = 20,000-1000P and Qs = 2000P10,000 where Q is the quantity of slices of pizza and P is the price per slice of pizza. Let's assume that the city council a price control regulation on price of every slice of pizza to make it affordable for students. Let's say this price ceiling is set at $8 per slice. a. Is this price ceiling binding? If yes, what problem will it create in the market? Is there any excess demand/ supply? If yes, then identify its magnitude.hanom b. Draw the above market with its equilibrium price, price ceiling (P) and point out the equilibrium quantities at these prices. c. Perform a graphical analysis of CS of buyers before and after the ceiling. Can you say if they are better off?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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