Price S.75t.-../ Suppl,y 60 45-. .30 + … .15 Demand 6 Quantity (1,000s of units

Question

Price S.75t.-../ Suppl,y 60 45-. .30 + … .15 Demand 6 Quantity (1,000s of units per time period) 15) Suppose the above graph represents the market for carrots. If government's goal is to keep the price of carrots at S0.30 per unit, then government will likely: a) Impose a price ceiling at S0.30 per unit. b) Impose a price floor at $0.30 per unit. c) Implement a system of rationing carrots to limit consumption per household. d) Allow market forces to determine the equilibrium price. 16) A market shortage of 2,000 units would occur at a price of: S.30 per unit b) a) S.45 per unit c) S.60 per unit d) S.75 per unit 17) Government could set a price at $0.60 per unit, which could lead to a a) floor; surplus in the amount of 1,000 units b) floor; surplus in the amount of 2,000 units c) ceiling; shortage in the amount of 1,000 units d) ceiling; shortage in the amount of 2,000 units 18) Suppose the government has established a price ceiling at $0.30 per unit. If the demand for this product decreases: a) the surplus that existed in this market will be eliminated. b) the surplus that existed in this market will become larger c) the shortage that existed in this market will be eliminated d) the shortage that existed in this market will become larger 19) At a price of S.45 per unit: a) The market is in equilibrium b) There is a shortage in the amount of 1,000 units c) There is a surplus in the amount of 2,000 units. d) There is a shortage in the amount of 3,000 units

Explanation / Answer

15) a) impose a price ceiling at $ 0.3 per unit

16) a) $ 0.3 per unit (Shortage = Demand - Supply = 2000 units)

17) b) floor, surplus = Supply - Demand = 2000 units

18) c) the shortage will be eliminated

19) a) the market is in equilibrium (Demand = Supply)

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