Consider two separate perfectly competitive markets with downward sloping demand and no externalities. Demand is identical in both markets. Supply is different, bu perfectly inelastic in both markets. The government has imposed a price CEILING at $5 in both markets. The price ceiling is binding in market BIND. In market NOBIN the same $5 price ceiling, is not binding. Trade is not permitted across markets. Which of the statement below is TRUE O Producers will want to move from NOBIND to BIND if they are able to. O If the two markets combine into one merged market with the same price ceiling of $5, more total goods will be traded compared to when they are separate. O If we remove the price ceiling in BIND, more goods will be traded. O Producers will want to move from BIND to NOBIND if they are able to.
Consider two separate perfectly competitive markets with downward sloping demand and no externalities. Demand is identical in both markets. Supply is different, bu perfectly inelastic in both markets. The government has imposed a price CEILING at $5 in both markets. The price ceiling is binding in market BIND. In market NOBIN the same $5 price ceiling, is not binding. Trade is not permitted across markets. Which of the statement below is TRUE O Producers will want to move from NOBIND to BIND if they are able to. O If the two markets combine into one merged market with the same price ceiling of $5, more total goods will be traded compared to when they are separate. O If we remove the price ceiling in BIND, more goods will be traded. O Producers will want to move from BIND to NOBIND if they are able to.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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