Question 4 • Draw the demand and supply curves to show the equilibrium. Call this Graph 4 (you have done this in PS2) a) Draw a horizontal line from Price =$4; say this is the new price floor implemented by the local government. Will this be a binding or a non binding price floor? What will be the new equilibrium price and quantity if it is a binding price floor? b) Draw a horizontal line from Price =$9; say this is the new price floor implemented by the local government. Will this be a binding or a non binding price floor? What will be the new equilibrium price and quantity if it is a binding price floor?

Question 4 • Draw the demand and supply curves to show the equilibrium. Call this Graph 4 (you have done this in PS2) a) Draw a horizontal line from Price =$4; say this is the new price floor implemented by the local government. Will this be a binding or a non binding price floor? What will be the new equilibrium price and quantity if it is a binding price floor? b) Draw a horizontal line from Price =$9; say this is the new price floor implemented by the local government. Will this be a binding or a non binding price floor? What will be the new equilibrium price and quantity if it is a binding price floor?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Answer in reference to diagram
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