The effect of imposing a
Explanation of Solution
When there is a
When there is a price ceiling imposed, it causes a shortage as the price is now set at a level below the equilibrium and lot of producers do not want to supply at this price level and thus, it leads to a shortage.
An example of a price ceiling is if the government puts a price ceiling for apartments at $2000 when the market has reached an equilibrium at $3000, then the maximum price at which apartments can be sold is $2000. Due of this, producers willing to supply between $2000-$3000 will now not supply as the price is too low. This causes a shortage.
Concept Introduction:
Price Ceiling- It refers to the price set by the government when the
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Chapter 6 Solutions
Principles of Economics (Second Edition)
- The problem statement never defines whether the loan had compound or simple interest. The readings indicate that the diference in those will be learned later, and the formula used fro this answer was not in the chapter. Should it be assumbed that a simple interest caluclaton should be used?arrow_forwardNot use ai pleasearrow_forwardNot use ai pleasearrow_forward
- Not use ai pleasearrow_forwardSuppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods). both may increase both may increase or one may stay the same while the other increases. both may decrease H may increase; Z may not change Z may increase; H may decreasearrow_forwardIn the Bismarck system,. may arise. neither selection both adverse and risk selection ☑ adverse selection risk selectionarrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
