803.7073754.0075704.3077654.6079604.9081Suppose that the government establishes a price ceiling of $3.70 for wheat.a. What might prompt the government to establish this price ceiling?O To control food pricesO To use it as a form of trade barrierO To use it as income support for farmersO To encourage productionb. In the diagram below, demonstrate a price ceiling of $3.70.Instructions: Use the tool provided 'Ceiling' to demonstrate a price ceiling of$3.70 for wheat. Plot only the endpoints of the line (2 points total).5.2Tools4.9Ceiling4.64.3(75,4.5)4.03.73.43.15560657075808590Quantity (thousands of bushels)c. Next, suppose that the government establishes a price floor of $4.60 forwheat. What will be the main effect of this price floor?O It will eliminate the market for wheat.O It will create a surplus.O It will create a shortage.O It will establish the equilibrium quantity.Price per bushel ($)

Answered: Image /qna-images/answer/65d5eef2-6449-4224-ac68-e02eb33cbf8d.jpg

Suppose that the government establishes a price ceiling of $3.70 for wheat a. What might prompt the government to establish this price ceiling? To control food prices O To use it as a form of trade barrier To use it as income support for farmers O To encourage production

Suppose that the government establishes a price ceiling of $3.70 for wheat a. What might prompt the government to establish this price ceiling? To control food prices O To use it as a form of trade barrier To use it as income support for farmers O To encourage production

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

80
3.70
73
75
4.00
75
70
4.30
77
65
4.60
79
60
4.90
81
Suppose that the government establishes a price ceiling of $3.70 for wheat.
a. What might prompt the government to establish this price ceiling?
O To control food prices
O To use it as a form of trade barrier
O To use it as income support for farmers
O To encourage production
b. In the diagram below, demonstrate a price ceiling of $3.70.
Instructions: Use the tool provided 'Ceiling' to demonstrate a price ceiling of
$3.70 for wheat. Plot only the endpoints of the line (2 points total).
5.2
Tools
4.9
Ceiling
4.6
4.3
(75,4.5)
4.0
3.7
3.4
3.1
55
60
65
70
75
80
85
90
Quantity (thousands of bushels)
c. Next, suppose that the government establishes a price floor of $4.60 for
wheat. What will be the main effect of this price floor?
O It will eliminate the market for wheat.
O It will create a surplus.
O It will create a shortage.
O It will establish the equilibrium quantity.
Price per bushel ($)

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