2. Soaring food prices in 2008 lead to widespread protests around the globe. For example, in Egypt,consumers were angry over the rising price of bread, a staple food in the Egyptian diet.a.Construct and label a graph for the market for bread. One cause for high bread prices was theincrease in demand for wheat to produce bio-fuels. Show on your graph the effect of anincrease in the price of wheat on the market equilibrium price and quantity for bread. Use yourlabels to explain how the market adjusts (that is, discuss how the surplus or shortage causesprices to change) to a new equilibrium price (P2) and quantity supplied and demanded (Q2).BrendExplanation:-2b. To relieve the growing discontent of consumers because the equilibrium price of bread was toohigh, the Government of Egypt tried to improve the situation by controlling the price of bread.To do this, would the Government impose a price floor or a price ceiling?C.Construct a second graph below of the market for bread. In this graph, 1st: start from the newequilibrium price (P2) and quantity (Q2) you identified in part (a). 2nd: illustrate effect of the pricecontrol you stated in your answer in part (b). 3rd: use your labels on your graph to explain inwords the effect of the price control you stated in your answer in part (b). Be sure to indicate anddiscuss all results of this policy in terms of price and quantity.eBreadExplanation:2d. Add labels to your graph in part (c) and then use them to indicate in a table the welfare effectsbefore and after the price control.Consumer Surplus:Producer Surplus:Total WelfareDead Weight Loss:Before Price controlAfter Price Control

Equilibrium in the market for a product is found out by the intersection of demand and supply.…

P a. rising price of bread, a staple food in the Egyptian diet. Construct and label a graph for the market for bread. One cause for high bread prices was the increase in demand for wheat to produce bio-fuels. Show on your graph the effect of an increase in the price of wheat on the market equilibrium price and quantity for bread. Use your labels to explain how the market adjusts (that is, discuss how the surplus or shortage causes prices to change) to a new equilibrium price (P2) and quantity supplied and demanded (Q2). Brend Explanation:

P a. rising price of bread, a staple food in the Egyptian diet. Construct and label a graph for the market for bread. One cause for high bread prices was the increase in demand for wheat to produce bio-fuels. Show on your graph the effect of an increase in the price of wheat on the market equilibrium price and quantity for bread. Use your labels to explain how the market adjusts (that is, discuss how the surplus or shortage causes prices to change) to a new equilibrium price (P2) and quantity supplied and demanded (Q2). Brend Explanation:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. Soaring food prices in 2008 lead to widespread protests around the globe. For example, in Egypt,
consumers were angry over the rising price of bread, a staple food in the Egyptian diet.
a.
Construct and label a graph for the market for bread. One cause for high bread prices was the
increase in demand for wheat to produce bio-fuels. Show on your graph the effect of an
increase in the price of wheat on the market equilibrium price and quantity for bread. Use your
labels to explain how the market adjusts (that is, discuss how the surplus or shortage causes
prices to change) to a new equilibrium price (P2) and quantity supplied and demanded (Q2).
Brend
Explanation:
-2
b. To relieve the growing discontent of consumers because the equilibrium price of bread was too
high, the Government of Egypt tried to improve the situation by controlling the price of bread.
To do this, would the Government impose a price floor or a price ceiling?
C.
Construct a second graph below of the market for bread. In this graph, 1st: start from the new
equilibrium price (P2) and quantity (Q2) you identified in part (a). 2nd: illustrate effect of the price
control you stated in your answer in part (b). 3rd: use your labels on your graph to explain in
words the effect of the price control you stated in your answer in part (b). Be sure to indicate and
discuss all results of this policy in terms of price and quantity.
e
Bread
Explanation:
2
d. Add labels to your graph in part (c) and then use them to indicate in a table the welfare effects
before and after the price control.
Consumer Surplus:
Producer Surplus:
Total Welfare
Dead Weight Loss:
Before Price control
After Price Control

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Step 1: Define equilibrium

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