Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 7, Problem 2MCQ
To determine
To select:
The option that correctly identifies the effect of a
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FIGURE 4-5
Maximum
allowed price
PE
Qo
Quantity of Gasoline
Refer to Figure 4-5. What is occurring in the market for gasoline?
A price ceiling has been imposed resulting in a surplus of gasoline.
OA price floor has been imposed resulting in a shortage of gasoline.
A price floor has been imposed resulting in a surplus of gasoline.
A price ceiling has been imposed resulting in a shortage of gasoline.
Price of Gasoline
A recent study found that the demand and supply schedules for Anti-virus software are as follows:
Price per Anti-virus Software
Quantity Demand
Quantity Supply
11$
1 million Anti-virus software
15 million Anti-virus software
10
2
12
9
4
9
8
6
6
7
8
3
6
10
1
Questions:
Anti-virus software manufacturers persuade the government to impose a price floor $10. What is the new market price? How many Anti-virus software are sold? What situation it will causes? Explain with a graph.
What will a price ceiling always create?
Shortage
surplus
a clear market
Chapter 7 Solutions
Foundations of Economics (8th Edition)
Ch. 7 - Prob. 1SPPACh. 7 - Prob. 2SPPACh. 7 - Prob. 3SPPACh. 7 - Prob. 4SPPACh. 7 - Prob. 5SPPACh. 7 - Prob. 6SPPACh. 7 - Prob. 7SPPACh. 7 - Prob. 8SPPACh. 7 - Prob. 9SPPACh. 7 - Prob. 10SPPA
Ch. 7 - Prob. 11SPPACh. 7 - Prob. 1IAPACh. 7 - Prob. 2IAPACh. 7 - Prob. 3IAPACh. 7 - Prob. 4IAPACh. 7 - Prob. 5IAPACh. 7 - Prob. 6IAPACh. 7 - Prob. 7IAPACh. 7 - Prob. 8IAPACh. 7 - Prob. 9IAPACh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQ
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- A low-income county decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at 2.40? At 2.00? At 3.50?arrow_forwardPrice $4 $2 $1 0 A B C Market for Good X What is the condition in the market for good X with an effective price ceiling at $2? D Supply X Demand 50 100 150 200 250 Quantity There is a surplus of 50 units. There is a surplus of 100 units. There is a shortage of 50 units. There is a shortage of 100 units.arrow_forwardIf the supply decreases and the demand decreases, a. b. C. d. the equilibrium price and quantity both decreases. the equilibrium price decreases while the equilibrium quantity increases. the equilibrium quantity decreases while the effect on price is ambiguous. the equilibrium price and quantity both increases. A a B b D darrow_forward
- A recent study found that the demand and supply schedules for Anti-virus software are as follows: Price per Anti-virus Software Quantity Demand Quantity Supply 11$ 1 million Anti-virus software 15 million Anti-virus software 10 2 12 9 4 9 8 6 6 7 8 3 6 10 1 Questions: College students demand a reduction in the price of Anti-virus software. As a result, government impose a price ceiling $7. What is the new market price? How many Anti-virus software are sold? What situation it will causes? Explain with graph.arrow_forwardUse the table below to answer the questions: Price Quantity Supplied Quantity Demanded $5 25 150 $10 50 100 $15 75 75 $20 100 50 $25 115 25 $30 130 10 Find the equilibrium price and quantity. Assume a $20 price floor is imposed in this market. Find the quantity demanded. Find the quantity supplied. Will this be a surplus or shortage? How big will the surplus or shortage be? How many units will be sold in the market? Will this price floor increase, decrease, or have no effect on consumer surplus? Will this price floor increase, decrease, or have no effect on total surplus? Will this price floor increase, decrease, or have no effect on deadweight loss?arrow_forwarda. Price ceilings create shortages if they are set b. Which of the following are price ceilings? the minimum wage price controls on prescription drugs an agricultural price support rent control below the equilibrium price.arrow_forward
- Describe in your words : Shortage and Surplus Price Floor and Price Ceilingarrow_forwardPrice of Gasoline P3 P₂ P₁ 0 9₂ 9₂ 52 D S₁ Price Ceiling Quantity of Gasoline Refer to the figure above. With a price ceiling present in this market, what will happen when the supply curve for gasoline shifts from S₁ to S₂? The market price will stay at P₁ due to the price ceiling. A shortage will occur at the price ceiling of P2. The price will increase to P3. A surplus will occur at the new market price of P₂.arrow_forwardIf a legal ceiling price is set above the equilibrium price, • a shortage of the product will occur. a surplus of the product will occur. a black market will evolve. neither the equilibrium price nor the equilibrium quantity will be affected.arrow_forward
- Empirical evidence suggests that increases in the minimum wage do not result in reductions in employment among workers aged 25-54, but cause reduced employment for teenagers. This would suggest: A. the minimum wage is lower than the market-clearing wage for workers aged 25-54 B. the higher minimum wage causes a shift in supply for older age groups C. the minimum wage is lower than the market-clearing wage for teenagersarrow_forwardIf a municipality sets a price ceiling below equilibrium for apartments in New York City, Select one: a. the price ceiling will create a surplus of apartments b. the price ceiling will create a shortage of apartments c. the price ceiling will not affect the market for apartments d. the market for more broadway plays will increase Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardWhich of the following will make an extension of supply? a. Rise in price b. Rise in subsidy c. Fall in subsidy d. Fall in pricearrow_forward
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