1st attempt Since 1996, market prices for helium have seen consistent increases

Question

1st attempt Since 1996, market prices for helium have seen consistent increases based on high demand in the technology sector. Many households have felt the impact directly when purchasing helium for birthday balloons. The US. government controls roughly 75% of the world's helium supply, and in 1996, it set a price floor for the helium market, which outlaws the sale of helium below $64 for 1,000 cubic feet Suppose that the graph belowillustrates the market for helium after the price floor was implemented. Price $15,000 $0 500 (1000s cubic feet

Explanation / Answer

Answer:

(a) becasue the price floor is set below the equilibrium price, the price control is $20

price equilibrium is $84

price floor is $64

price control = $84 - $64 = $20

(b) in the current market, a price floor of $64 would chnage the qunatity of helium gas bought and sold. there will be excess demand and shortage of supply because price floor is set below the equilibrium price so consumer will increase their demand while the producers will reduce the supply.

(c) the quantity bought in the market is $1150 thousand cubic feet.

quantity bought is at the point where demand curve is intersecting price floor curve

(d) the quantity sold in the market is $950 thousand cubic feet

quantity sold is at the point where supply curve is intersecting price floor curve

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