The impact of a binding price floor in the economy.

Question

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Answer 1

Question

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

Answer 6

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

Answer 7

Chapter 6, Problem 1CQQ

To determine

The impact of a binding price floor in the economy.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘d’ is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and creating a loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The laborers should be paid minimum wages when their service is rendered.

Option (d):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Thus, the price floor leads to the economic surplus in the economy. So, option ‘d’ is correct.

Option (a):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This causes the movement up along the existing supply curve and there will be no shift in the supply curve. Thus, option ‘a’ is incorrect.

Option (b):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. Since the price is set by the government, the demand will remain the same and usually, the floor price will be set above the equilibrium price. It declines the demand and usually leads to a top-leftward shift in the demand curve. Thus, option ‘b’ is incorrect.

Option (c):

When there is a price floor in the economy, then the producers will get a minimum of the floor price and this will increase the revenue of the producers. This minimum guaranteed price would lead to the increased supply by the producers; more than the economic demand in the economy. This increased supply causes the economic surplus in the economy and not economic shortage. Thus, option ‘c’ is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Price floor: It is the minimum legal price set for a commodity or service by the government or the authority. This is to prevent the prices from going too low.

Answer 13

Ch. 6.1 - Prob. 1QQ Ch. 6.2 - Prob. 2QQ Ch. 6 - Prob. 1CQQ Ch. 6 - Prob. 2CQQ Ch. 6 - Prob. 3CQQ Ch. 6 - Prob. 4CQQ Ch. 6 - Prob. 5CQQ Ch. 6 - Prob. 6CQQ Ch. 6 - Prob. 1QR Ch. 6 - Prob. 2QR

The impact of a binding price floor in the economy.

The impact of a binding price floor in the economy.

Answer to Problem 1CQQ

Explanation of Solution

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Chapter 6 Solutions