Corn flour is a staple food in South America. With rising inflation, several governments are considering setting a maximum price for corn flour. The current market price of a kilogram of corn flour it $10. a. Suggest a maximum price for a kilogram of corn flour that would be binding and explain why. b. Compare the kilograms of flour traded before the maximum price is imposed and after. Show these two quantities on a graph. Clearly label all axes, curves, and relevant points on the graph. References to these points should be used in the typed portion of your answer. c. Describe the consequences of this policy to consumers of corn flour.

Corn flour is a staple food in South America. With rising inflation, several governments are considering setting a maximum price for corn flour. The current market price of a kilogram of corn flour it $10. a. Suggest a maximum price for a kilogram of corn flour that would be binding and explain why. b. Compare the kilograms of flour traded before the maximum price is imposed and after. Show these two quantities on a graph. Clearly label all axes, curves, and relevant points on the graph. References to these points should be used in the typed portion of your answer. c. Describe the consequences of this policy to consumers of corn flour.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 24P

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