Price gouging, or large increases in the prices of essential goods during an emergency, is illegal in 34 states. Laws against price gouging are essentially ________, set at the price of a good before the emergency began, and result in a ________ of the good. price floors; surplus price floors; shortage price ceilings; surplus price ceilings; shortage
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- A low-income country decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. The conditions of demand and supply are given in Exhibit 10. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage if the price ceiling is set at $2.40? At $2.00? At $3.60? Price Qd Qs $1.60 9,000 5,000 $2.00 8,500 5,500 $2.40 8,000 6,400 $2.80 7,500 7,500 $3.20 7,000 9,000 $3.60 6,500 11,000 $4.00 6,000 15,000 Exhibit 10. Demand and Supply of Bread in Low-Income CountryWhen the quantity demanded of a goods is equal to the quantity supplied of the goods, then-___ what is the correct answer? Is it the government is intervening in the market? There is a surplus. There is a shortage. None of themDemand and Supply! a) Serious natural disasters like hurricanes and tornadoes cause widespread and extensive damage to buildings. As a result of a natural disaster, what would you expect to happen in the market for building supplies? Describe b) In an attempt to reduce poaching of conch, officials in The Bahamas confiscate illegally gathered conch. Using your understanding of shifts in supply and demand, will this turn out to be a helpful or hurtful move on the Bahamian government's part?
- Which of the following occurs when an excess demand occurs in the market for a good? Quantity supplied exceeds quantity demanded and the price falls, which encourages more production and less consumption. Quantity demanded exceeds quantity supplied and the market mechanism pushes the price down, which encourages more production and less consumption. Quantity supplied exceeds quantity demanded and the price rises, which encourages more production and less consumption. Quantity demanded exceeds quantity supplied and the market mechanism pushes the price up, which in turn encourages more production and less consumption.Use the graph below to answer the following questions: Price $15 Supply $14 $13 $12 $11 $10 Demand 25 75 125 175 225 275 QuantityConsider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows: Price $ Demand mln Supply mln 60 22 14 80 20 16 100 18 18 120 16 20 Calculate the price elasticity of demand when the price is $80 and when the price is $100. Calculate the price elasticity of supply when the price is $80 and when the price is $100. What are the equilibrium price and quantity? Suppose the government sets a price ceiling of $80. Will there be a shortage or a surplus, and if so, how large will it be?
- Question 9 Setting a price ceiling below the equilibrium price can result in a surplus, where the quantity demanded exceeds the quantity supplied. a shortage, where the quantity demanded exceeds the quantity supplied. a surplus, where the quantity supplied exceeds the quantity demanded. a shortage, where the quantity supplied exceeds the quantity demanded. no impact on the quantity demanded or the quantity supplied. Question 10 US minimum wage law is an example of a price floor. price ceiling. law that requires quantity demanded to be equal to quantity supplied. law that allows individual employers and employees to make free decisions. law that sets the minimum number of hours that an employee must work for wages during the week. Question 11 Gross domestic product (GDP) is best defined as the total market…Suppose demand and supply are given by Qd = 40 − P and Qs = 1.0P − 10. c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $18 is imposed in the market. Also, determine the full economic price paid by consumers.Quantity demanded: Quantity supplied: Shortage: Full economic price: $20 18- 16 14+ 12 10 8+ Price Supply N 10 12 14 16 18 20 Quantity a) What is the equilibrium price and quantity? Demand b) Suppose the government imposes a price floor at $16. Is this a binding/non-binging price floor? How much surplus/shortage is generated in the market? c) Suppose the government imposes a price ceiling at $16. Is this a binding/non-binding price ceiling? Is there a shortage or a surplus generated in the market? How much surplus/shortage is generated in the market?
- Consider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct? 1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market. 2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed. 3. Producer surplus in the market increased after the price ceiling was imposed. 4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.Suppose demand and supply are given by Qd = 40 − P and Qs = 1.0P − 10. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $22 is imposed in the market. Also, determine the full economic price paid by consumers.Quantity demanded: Quantity supplied: Shortage: Full economic price:Suppose demand and supply are given by Qd = 40 - P and Qs = 1.0P - 20. a. What are the equilibrium quantity and price in this market? b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $34 is imposed in this market. c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $24 is imposed in the market. Also, determine the full economic price paid by consumers.
