Consumer 1 Consumer 2 Consumer 3 Firm 1 Firm 2 Price Quantity Demanded Quantity
ID: 1215402 • Letter: C
Question
Consumer 1
Consumer 2
Consumer 3
Firm 1
Firm 2
Price
Quantity Demanded
Quantity Demanded
Quantity Demanded
Quantity Supplied
Quantity Supplied
1
20
10
30
0
10
2
15
8
25
5
20
3
10
5
20
10
25
4
5
2
10
20
35
5
0
0
5
30
50
1) What is the equilibrium price in this market?
2) What would happen in this market if a price floor were set at 4?
3) What would happen in this market if a price ceiling were introduced at 2?
4) What would happen in this market if the government were to impose a price ceiling at 4?
5) What would happen in this market if the government were to impose a price floor at 2?
Consumer 1
Consumer 2
Consumer 3
Firm 1
Firm 2
Price
Quantity Demanded
Quantity Demanded
Quantity Demanded
Quantity Supplied
Quantity Supplied
1
20
10
30
0
10
2
15
8
25
5
20
3
10
5
20
10
25
4
5
2
10
20
35
5
0
0
5
30
50
Explanation / Answer
1. Equilibrium price = $3 (Here Demand = Supply = 35)
2. If a price floor were set at 4, there will be an excess supply of 55 - 17 = 38 units
3. If a price ceiling were introduced at 2, there will be an excess demand of 48 - 25 = 23 units
4. If the government were to impose a price ceiling at 4, there will be an excess supply of 55 - 17 = 38 units
5. If the government were to impose a price floor at 2, there will be an excess demand of 48 - 25 = 23 units
P($) Market Demand(C1+C2+C3) Market Supply(F1+F2) 1 30 10 2 48 25 3 35 35 4 17 55 5 5 80Related Questions
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