Unlike a nonbinding one, a binding price floor creates a mismatch between quantity supplied and quantity demanded and distorts market equilibrium”. Qualify this statement and make sure to include (what a price floor is, and a graphical example) in your analysis
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Unlike a nonbinding one, a binding
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- if the price ceiling of a good is set AT the Equalibrium Price, is it non binding?Suppose the supply curve for chicken taco sandwiches can be written as Qs = -10 + 5P and the demand curve can be written as Qd = 80 - 5P Now suppose the government institutes a price floor on chicken taco sandwiches, to discourage their consumption. They set the price floor at $10. How many chicken taco sandwiches will be bought and sold when this price floor is in place? (Hint: will the quantity traded be determined along the supply curve, the demand curve, or both in this case?) 30 50 20 40assume the equilibrium price in a free market for an office table is R320 and equilibrium quantity is R1000. Using the supply and demand framework, draw a graph illustrating the above scenario and explain how the market for this piece of furniture moves from disequilibrium to equilibrium if the price of the table moves up to R400
- Housing policy analysts debate the best way to increase the number of housing units available to low-income households. One strategy-the demand-side strategy-is to provide people with housing vouchers, paid by the government, that can be used to rent housing supplied by the private market. Another-a supply-side strategy—is to have the government subsidize housing suppliers or to build public housing. Using supply and demand curves, think about the market outcomes of the supply-side and demand-side strategies. Which side do you support? Explain why.Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium (i.e., supply equals demand in each case). Assume further that a good harvest impacts the world’s sugar cane crop. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption. If the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. Explain how will this impact the revenues for sugar growers, rum producers and whiskey producers?Assume that the demand and supply functions for each bottle of Beer ABC are. Quantity Demand= 1,000 – 400P Quantity Supply = 100P If a price ceiling is set at $2.50 for each bottle, what will be the impact on the market equilibrium? Any changes in quantity demand or quantity supplied?
- Hello, I only need the answer to the last question that is in BOLD. A market consists of groups of buyers and sellers of a good or service. Market equilibrium represents the price at which the quantity of goods supplied is balanced with the number of goods consumers are willing and able to buy. Consider the market for coffee: Assume first that there is a heatwave that damages a large portion of coffee beans. Describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Next, assume there is a new study that finds enormous health benefits to coffee consumption. Again, describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Now, extend your analysis to what might happen if both of these events (weather which damages coffee beans…Suppose that you decide to start a new business of making children’s ready-made garments. Make a (Hypothetical) linear supply schedule with 7 different price points and corresponding quantity supplied for your business. Make a graph showing equilibrium, shortage and surplus in the ready-made garments market. Give interpretation of this graph. Suppose cheap ready-made garments are imported from China. Draw a graph to show changes in equilibrium price and quantity for the Pakistani ready-made garments market. Give interpretation of this graph. Suppose that to boost the local industry, the Pakistani government gives subsidy on electricity prices. Draw a graph to show changes in equilibrium price and quantity. Give interpretation of this graph. Suppose that cheap cloth is imported from China for production of readymade garments and at the same time tourism in Pakistan increases bringing many more buyers of ready-made garments in the market. What will be impact on equilibrium price and…Suppose that in the citrus market, while the amount of production decreased due to cold winter conditions, consumers' desire to drink citrus juice increased in order to strengthen their immunity due to the COVID-19 epidemic. In this case, how is the equilibrium price and quantity affected in the citrus market? Evaluate this with the help of the figure for the case where the supply curve shifts more than the demand curve. (Note: Do not forget to write the names of the axes while drawing the figure. Show clearly the supply-demand curve and the market equilibrium point in the first case and the supply-demand curve and equilibrium point after the shift.)
- Determine whether each of the following statements is True or False. Carefully explain your answer. (a) “When a demand-side policy such as a subsidy to homebuyers is applied in a housing market, the demand for housing shifts to the right. This increases the equilibrium price of housing and leads to an increase in supply. As a result, the supply curve shifts to the right, and the equilibrium price of housing falls.” (b) “When a firm production process generates negative externalities (e.g. industrial pollution) imposing an appropriately chosen tax per unit of output is going to increase the firm’s marginal cost. This will in turn cause the firm to produce at the point where the marginal benefit of the last unit of output is equal to the social marginal cost. The resulting quantity of output will be efficient from the social point of view.” (c) “A monopoly firm is in the short-run equilibrium making a positive economic profit. An increase in the Fixed Cost of production is…Find the consumers' surplus and the producers' surplus at the equilibrium price level for the given price-demand and price-supply equations. Include a graph that identifies the consumers' surplus and the producers' surplus. Round all values to the nearest integer. p=D(x) = 110e 0.004x. `; p= S(x) = 25e0.004x The value of x at equilibrium is. (Round to the nearest whole number as needed.)
