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

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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.

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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 ...
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