Access over 20 million homework & study documents

3 In the context of questions 1 and 2 above 3a What are the mark

Content type
User Generated
Rating
Showing Page:
1/2
3. In the context of questions 1 and 2 above.
3a. What are the market equilibrium price and quantity?
3b. What is the effect of a price ceiling of 16?
3c. What is the effect of a price floor of 24?
3d. What would happen (compared to 3a above) to the
market equilibrium price and quantity, to the demand
curve, and to the supply curve if there were a decrease in
personal disposable income in the U.S.
3e. What would happen (compared to 3a above) to the
market equilibrium price and quantity, to the demand
curve, and to the supply curve if there were a management
innovation which lowered the cost of making the product.
Solution
Supply
P=12+(2/3)Q
Demand
P=36-Q
(a) Equilibrium quantity and price would be:
12+2/3Q=36-Q
5Q/3=24
Q=14.4
P=$21.6
(b) If price cieling is $16(below equilibrium), it is binding.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/2

Sign up to view the full document!

lock_open Sign Up
Unformatted Attachment Preview
3. In the context of questions 1 and 2 above. 3a. What are the market equilibrium price and quantity? 3b. What is the effect of a price ceiling of 16? 3c. What is the effect of a price floor of 24? 3d. What would happen (compared to 3a above) to the market equilibrium price and quantity, to the demand curve, and to the supply curve if there were a decrease in personal disposable income in the U.S. 3e. What would happen (compared to 3a above) to the market equilibrium price and quantity, to the demand curve, and to the supply curve if there were a management innovation which lowered the cost of ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
Really great stuff, couldn't ask for more.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4