MICROECONOMICS-ACCESS CARD <CUSTOM>
MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
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Chapter 5, Problem 10QE
To determine

Impact of an effective price floor.

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Will consumers benefit with the price floor?
Suppose the Hong Kong government imposes a price ceiling above the equilibrium price offlour. How does this price ceiling affect the price and the quantity sold of flour? Please explain.
Market research has revealed the following information about the market for washing machines: The demand schedule can be represented by the equation QD = 1,600 – 300P, where QD is the quantity demanded and P is the price. The supply schedule can be represented by the equation QS = 1,400 + 700P, where QS is the quantity supplied. Calculate the equilibrium price and quantity in the market for washing machines. Identify the flaw in this analysis: “If more Bahamians go on a low-carb diet, the demand for pasta will fall. The decrease in the demand for pasta will cause the price of pasta to fall. The lower price, however, will then increase the demand. In the new equilibrium, Bahamians might end up consuming more pasta than they did initially.”
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