**Understanding Market Equilibrium Through Price Controls**Consider the market for some product $ X $ that is represented in the demand-and-supply diagram. For each of the legislated price controls listed, determine the price and quantity exchanged after imposition of control, whether a shortage or surplus develops, and if so, how much.---**a. A price floor at $14 per unit**- **Price:** $___- **Quantity Exchanged:** ___ units- **Explanation:** This means that there is a ___ (surplus/shortage).---**b. A price floor at $22 per unit**- **Price:** $___- **Quantity Exchanged:** ___ units- **Explanation:** This means that there is a ___ (surplus/shortage).---**c. A price ceiling at $14 per unit**- **Price:** $___- **Quantity Exchanged:** ___ units- **Explanation:** This means that there is a ___ (surplus/shortage).---### Demand and Supply Graph Analysis**Graph Description:**- **X-axis:** Quantity (units per day), ranging from 0 to 16.- **Y-axis:** Price (dollars), ranging from 0 to 38.- **Demand Curve (D):** Downward sloping from left to right.- **Supply Curve (S):** Upward sloping from left to right.- **Equilibrium Point:** Identified where the demand and supply curves intersect.In this graph:- At a price of approximately $12, the equilibrium quantity is about 10 units per day.- Price levels above or below this equilibrium result in differing quantities demanded and supplied.**Detailed Analysis for Price Controls:**1. **Price Floor at $14 per unit:** - Since the price floor ($14) is above the equilibrium price ($12), it will result in a surplus. - The quantity supplied will exceed the quantity demanded at this higher price. - **Example Calculation (Illustrative):** If at $14 the quantity supplied is 12 units and the quantity demanded is 8 units, there is a surplus of 4 units. 2. **Price Floor at $22 per unit:** - This price is significantly higher than the equilibrium price, leading to a larger surplus. - A much higher quantity will be supplied compared to the quantity demanded. - **Example Calculation (Illustrative):

The government's intervention or regulation of prices in the economy to influence and control the…

Consider the market for some product X that is represented in the Kdemand-and-supply diagram For each of the legislated price controls listed, determine the price and quantity exchanged after imposition of control, whether a shortage or surplus develops and if so, how much a. a price floor at $14 per unit The price is $ and the quantity exchanged is This means that there is (Type whole numbers) b. a price floor at $22 per unit The price is and the quantity exchanged is This means that there is (Type whole numbers) c. a price ceiling at $14 per unit The price is $ and the quantity exchanged is This means that there is (Type whole numbers) Price (5) 38.00 34.00 30.00- 26,00 22.00 18.00 1400- 10:00 600 2004 16 40 Quantity (units per day) 40 80 G

Consider the market for some product X that is represented in the Kdemand-and-supply diagram For each of the legislated price controls listed, determine the price and quantity exchanged after imposition of control, whether a shortage or surplus develops and if so, how much a. a price floor at $14 per unit The price is $ and the quantity exchanged is This means that there is (Type whole numbers) b. a price floor at $22 per unit The price is and the quantity exchanged is This means that there is (Type whole numbers) c. a price ceiling at $14 per unit The price is $ and the quantity exchanged is This means that there is (Type whole numbers) Price (5) 38.00 34.00 30.00- 26,00 22.00 18.00 1400- 10:00 600 2004 16 40 Quantity (units per day) 40 80 G

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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