Please clearly label which part of the question (a, b, or c) you are answering. a. What is the purpose of a price floor? b. Name a good that the government might want to impose a price floor on, and justify your answer C. Consider the statement: "A non-binding price floor would have no effect on the market. In that case, there is no point to having a price floor." Do you agree or disagree with this statement? Justify your answer.
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- Q^d= 9.5 - 2p Q^s= 0.6p Price Floor. Suppose that the government imposes a price floor equal to P F = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price floor on this diagram. Is this price floor binding in your market for donuts? Carefully explain how you came to your answer. 1 (b) If this price floor is binding, how many donuts will be sold in this market following its imposition, and at what price? (c) If this is a binding price floor, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this shortage or surplus.It is an illegal market that emerges when binding and nonbinding price controls are in place. It is an illegal market that emerges when binding price ceilings are in place. O It is an illegal market that emerges when binding price floors are in place. It is an illegal market that emerges when only binding price ceilings and binding price floors are in place.. It is an illegal market that em erges when no price controls are present. Save Question 10 You would expect there to be many customers for a black market good when the opportunity cost of finding the good under a: O binding price floor is high. binding price floor is low. nonbinding price ceiling is high. binding price ceiling is low. binding price ceiling is high.Consider the market for ice cream cones. Suppose that supply in this market is given by ?? =?? and demand is given by ?? =30−4×??. Answer the following questions. a.) Suppose that the government is considering imposing a $4.00 price control as either a price ceiling or a price floor. Would this be a binding price control as a price floor or as a price ceiling? Will this cause a shortage or a surplus? Compute the size of the shortage or surplus that would result. b.) Suppose that instead of a price control, the government is considering imposing a $1.00 per ice cream cone tax in the market on producers. Compute the tax equilibrium quantity ???, the consumer effective price with the tax ??, the producer effective price with the tax ??, consumer tax incidence and producer tax incidence. c.) Notice that the competitive equilibrium (??,??) and the point (???,??) are both on the demand curve. Use them to compute the price elasticity of demand. d.) Notice that the competitive equilibrium…
- Consider the market for ice cream cones. Suppose that supply in this market is given by PS =QS and demand is given by PD=30−4×QD. Answer the following questions. a.) Suppose that the government is considering imposing a $4.00 price control as either a price ceiling or a price floor. Would this be a binding price control as a price floor or as a price ceiling? Will this cause a shortage or a surplus? Compute the size of the shortage or surplus that would result. b.) Suppose that instead of a price control, the government is considering imposing a $1.00 per ice cream cone tax in the market on producers. Compute the tax equilibrium quantity QTe, the consumer effective price with the tax PD, the producer effective price with the tax PD, consumer tax incidence and producer tax incidence. c.) Notice that the competitive equilibrium (Qe,Pe) and the point (QTe,PD) are both on the demand curve. Use them to compute the price elasticity of demand. d.) Notice that the competitive equilibrium…P 1. Consider a competitive market where daily supply and demand are QP(P) = 15 - QS(P) = 2P, where quantities are measured in thousands of units and prices are in dollars per unit. Assume that this market does not create any externalities benefits are borne by the sellers and buyers directly involved in the market. 2 meaning that all costs andQUESTION 4 Do all buyers benefit from a binding price ceiling? a. Yes. A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market. b. No. A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium. c. No. A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market d. No. A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products. e. No. A binding price ceiling benefits only some buyers because, although the price is initially lower, it eventually increases to the equilibrium price OO O OO
- K- Consider the market for wheat, depicted in the figure to the right. Suppose a price floor of p imposed by the government As a result of the price floor, there is a of wheat Compared with the market-clearing equilibrium, is the price floor efficient? What area represents the loss in efficiency in terms of consumer and producer surplus resulting from the price floor? Use the triangle drawing tool to shade in deadweight loss. Label this shaded area Deadweight Los Carefully follow the instructions above, and only draw the required objects. Price of wheat Pa 0₁ 0₂ a₂ Quantity of wheat 2Question 25 (Figure: Understanding Price Ceilings and Floors) In the graph, if the government sets a maximum price of $25, this is an example of a(n) P 90 75 50 25 200 500 Question 26 800 O binding price ceiling. efficient price floor. Ononbinding price ceiling. O binding price floor. 1 E D 0Consider the market for ice cream cones. Suppose that supply in this market is given by PS = QS and demand is given by PD = 30 – 4 x QD. Answer the following questions. a.) Suppose that the government is considering imposing a $4.00 price control as either a price ceiling or a price floor. Would this be a binding price control as a price floor or as a price ceiling? Will this cause a shortage or a surplus? Compute the size of the shortage or surplus that would result. b.) Suppose that instead of a price control, the government is considering imposing a $1.00 per ice cream cone tax in the market on producers. Compute the tax equilibrium quantity Q, the consumer effective price with the tax PP, the producer effective price with the tax PS, consumer tax incidence and producer tax incidence. c.) Notice that the competitive equilibrium (Q°, Pº) and the point (Q,P") are both on the demand curve. Use them to compute the price elasticity of demand. d.) Notice that the competitive equilibrium…
- A shortage of a good arises when there is a binding price floor. A surplus of a good arises when there is a binding price ceiling. Select one: a.True b.FalseQ^d= 9.5 - 2p Q^s= 0.6p Price Ceiling. Suppose that the government imposes a price ceiling equal to P C = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price ceiling on this diagram. Is this price ceiling binding in your market for donuts? Carefully explain how you came to your answer. (b) If this price ceiling is binding, how many donuts will be sold in this market following its imposition, and at what price? (c) If this is a binding price ceiling, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this shortage or surplus.Consider a market with the following demand and supply functions: D(p) = max {0, 15 – p} and S(p) = 2p.