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- Show graphically the impact of the price floor and in another graph the impact of the price ceiling. Quantity Demanded Quantity Supplied Price 100 10 90 20 20 80 40 30 70 60 40 60 80 50 50 100 60 40 120 70 30 140 80 20 160 90 10 180 100 200 8- Show graphically the impact of the price floor and in another graph the impact of the price ceiling. rico loueL What isWhat is the effect of a binding price ceiling on the quantity demanded of a product? O Demand will fall O Demand will rise O No change in demand O Supply will change in response to a change in demandA. If the minimum wage is above W*, would there be a shortage or a surplus or neither in the labor market? Illustrate the minimum wage (Wmin), the quantity demanded at the minimum wage (QD^min), the quantity supplied at the minimum wage (Qs^min) , and wether there is a surplus or a shortage or neither on the graph above. B. If the minimum wage is below W* , would there be a shortage or a surplus or neither ? ( hint: it’s a minimum wage) C. Give atleast one argument for and one argument against having minimum wage that is above the equilibrium wage
- What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium? Also explain which causes a surplus of a good - price ceiling or a price floor. Give examples.The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dolars per case) 200 180 160 140 120 100 80 60 40 20 0 + Buyers Sellers Demand Before Tax After Tax Tax Wedge Supply 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Cases of craft beer) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay (Cases of craft beer) (Dollars per case) Price Sellers Receive (Dollars per case) Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per case) Elasticity The tax burden…The following graph depicts a market where a tax has been imposed. Pe was the equilibrium price before the tax was imposed, and Qe was the equilibrium quantity. After the tax, PC is the price that consumers pay, and PS is the price that producers receive. QT units are sold after the tax is imposed. NOTE: The areas B and C are rectangles that are divided by the supply curve ST. Include both sections of those rectangles when choosing your answers. Which areas represent the revenue collected from this tax? A + B + F B + C F + G E A + E
- Give an example of a price ceiling and an example ofa price floorThe ticket price for a play at a Broadway theater is $160, and the theater is full every night. The theater owner, in consultation with a local non-profit arts group, wants to make attending the play more affordable, to open up the theater experience to patrons with more limited budgets. The owner decides to lower the ticket price to $50. Sketch a supply-anddemand graph that represents the market for these play tickets under this price-ceiling policy. Briefly explain why this market is not in equilibrium when the price ceiling is in effect. On your graph, clearly identify the size of the shortage or surplus this market will experience.Macmillan Learning (Figure: Understanding Price Ceilings and Floors) In the market depicted in the graph, if the government sets a price of $25, there is an: P 90 75 50 25 10 200 500 800 effective price ceiling. inefficient price floor. O ineffective price ceiling. efficient price floor. S D
