Answered: Price $15,000 $84 $64 $44 $0 Quantity…

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

The U.S. government controls roughly 75% of the world’s helium supply, and in 1996, it set a price floor for the helium market, which outlaws the sale of helium below $64 for 1,000 cubic feet.

Suppose that the graph below illustrates the market for helium after the price floor was implemented.

(c) The quantity bought in the market is __ cubic feet.

(d) The quantity sold in the market is ___ cubic feet.

Price
$15,000
$84
$64
$44
D
$0
Quantijty
(1000js cubic feet)
500
1000
1200
1800

Expert Solution

Step 1

Price floor refers to the minimum legal price that should be charged for a good. A binding price floor is imposed above the equilibrium.

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