EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 6, Problem 2QR
To determine
The reason behind the cause of shortage in the economy.
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What is the price ceilings role in the market?
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The graph below shows a price ceiling that happens to lie exactly at the equilibrium price. Drag the price ceiling line (Pceil) away from
the equilibrium price, either up or down, to make it a nonbinding price ceiling.
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- The following graph shows market for printers at equilibrium at price of $100 and quantity of 100. A. Determine the effects of a $90 price ceiling on quantity demanded, quantity supplied, and quantity exchanged in the market. B. As a result of this price ceiling there will be how much shortage or Surplus in this market? C. Show the effects of the price ceiling on the graph. You can draw the graph on paper and upload an image as a PNG, JPEG or PDF document. Please keep in mind that I can not open the files with HEIC extension. D. Show the deadweight loss of the price ceiling on your graph. P 130 120 110 100 S 90 80 70 60 50 40 50 60 70 80 90 100 110 120 Q Darrow_forwardExplain what would be likely to happen if the government placed a price floor on milk. Suppose that the price of milk is $4/gallon, and the government prohibits anyone from selling milk for less than $5/gallon. Your answer should consist of a complete well-written paragraph using complete sentences as well as a supply and demand diagram.arrow_forwardWhat is the impact of a simultaneous increase of supply and a decrease in demand on the marketarrow_forward
- 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.arrow_forwardHow can a price ceiling make consumers better off? Under what conditions might it make them worse off?arrow_forwardSome cities impose rent control laws, which are price controls or limits on the price of rental accommodations (apartments, houses, and mobile homes). New York City alone had over two million rent-controlled apartments in the early 1950s, but only about 27,000 as of 2014. Show the effect of a rent control law on the equilibrium rental price and the quantity of N.Y. apartments. Show the amount of excess demand on your supply-and-demand diagram. Consider the market rental dwellings in New York illustrated in the figure to the right. Suppose the maximum rent with New York's laws is p. 1.) Using the point drawing tool, indicate the quantity of rental dwellings demanded and the market rent with the rent control laws. Label this point 'ed.' 2.) Using the point drawing tool, indicate the quantity of rental dwellings supplied and the market rent with the rent control laws. Label this point 'es.' Carefully follow the instructions above, and only draw the required objects. P, rent Q Q, quantity…arrow_forward
- The Organization for the Promotion of Brussels Sprouts has convinced the government of Ironia to institute a price floor on the sale of Brussels sprouts at $8 per bushel. Demand is given by:P = 9 – Qand supply by:P = 2Q,where Q is measured in thousands of bushels.Instructions: Round your answers to the nearest whole number.a. At market equilibrium, the price is $ per bushel and the equilibrium quantity is thousand bushels.b. With the price floor, the price is $ per bushel and the quantity sold is thousand bushels.c. The excess quantity supplied of Brussels sprouts produced with the price floor is thousand bushels.arrow_forwardSuppose the government sets a price ceiling above the equilibrium price for milk. Which of the following will be the result?arrow_forwardSuppose government regulates the price of beef and sets it below the market clearing price. Explain the outcome of the initiative by using the concept of floor pricearrow_forward
- 3. Consider the market for buko juice. In this market, the supply curve is given by S = 10PJ -5PA and the demand curve is given by D = | 100-15PJ +10PT, where J denotes buko juice, A denotes buko, and T denotes tea.arrow_forwardWhat will happen to the market condition if the government set up the price above the equilibrium price, if the income is reduced significantly.arrow_forwardIf the supply decreases and the demand decreases, a. b. C. d. the equilibrium price and quantity both decreases. the equilibrium price decreases while the equilibrium quantity increases. the equilibrium quantity decreases while the effect on price is ambiguous. the equilibrium price and quantity both increases. A a B b D darrow_forward
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