Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 2CQQ
To determine
The impact of increased price ceiling on the economy.
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An increase in a price ceiling will change the amount of a good sold in a market:
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a
if the price ceiling is effective.
b
regardless of whether or not the ceiling is effective.
c
if the price ceiling is ineffective.
d
if demand is inelastic.
None
In a market with a binding price cei ling, an increasein the cei ling will ___ t he quantity suppl ied, ___ t he quantity demanded, and reduce thea. increase, decrease, surplusb. decrease, increase. surplusc . increase, decrease, shortaged. decrease, increase, shortage
Chapter 6 Solutions
Principles of Microeconomics
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- What is the relationship between quantity Demanded and quantity supplied at equilibrium? What is the relationship when there is a shortage? What is the relationship when them is a surplus?arrow_forwardA low-income county decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at 2.40? At 2.00? At 3.50?arrow_forwardWhat is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price ceiling cause a shortage?arrow_forward
- How can you locate the equilibrium point on a demand and supply graph?arrow_forwardIn a market where the supply curve is perfectly inelastic how does an excise tax affect the price paid by consumers and the quantity bought and sold?arrow_forwardTable 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following changes. Three new nightclubs open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price. The city eliminates a tax that it placed on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by 10%.arrow_forward
- The computer market in recent years has seen many more computing sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each. A rise in demand A fall in demand A rise in supply A fall in supplyarrow_forwardThe price of coffee rose sharply last month, while the quantity sold remained the same. Five people suggest various explanations: Leonard: Demand increased, but supply was perfectly inelastic. Sheldon: Demand increased, but it was perfectly inelastic. Penny: Demand increased, but supply decreased at the same time. Howard: Supply decreased, but demand was unit elastic. Raj: Supply decreased, but demand was perfectly inelastic. Who could possibly be right? Use graphs to explain your answer.arrow_forwardExplain why the following statement is false: In the goods market, no buyer would be willing to pay more than me equilibrium price.arrow_forward
- Which of the following changes in the financial market will lead In an increase in the quantity of loans made and received: a rise in demand a fall in demand a rise in supply a fall in supplyarrow_forwardA price ceiling will have the largest effect: substantially below the equilibrium price slightly below the equilibrium price substantially above the equilibrium price slightly above the equilibrium price Sketch all four of these possibilities on a demand and supply diagram to illustrate your answer.arrow_forwardWhen someones kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the pure.arrow_forward
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