Q^d= 9.5 - 2p Q^s= 0.6p Price Ceiling. Suppose that the government imposes a price ceiling equal to P C = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price ceiling on this diagram. Is this price ceiling binding in your market for donuts? Carefully explain how you came to your answer. (b) If this price ceiling is binding, how many donuts will be sold in this market following its imposition, and at what price? (c) If this is a binding price ceiling, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this shortage or surplus.
Q^d= 9.5 - 2p Q^s= 0.6p Price Ceiling. Suppose that the government imposes a price ceiling equal to P C = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price ceiling on this diagram. Is this price ceiling binding in your market for donuts? Carefully explain how you came to your answer. (b) If this price ceiling is binding, how many donuts will be sold in this market following its imposition, and at what price? (c) If this is a binding price ceiling, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this shortage or surplus.
Chapter5: Markets In Motion And Price Controls
Section: Chapter Questions
Problem 6P
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Q^d= 9.5 - 2p
Q^s= 0.6p
Price Ceiling . Suppose that the government imposes a price ceiling equal to P C = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price ceiling on this diagram. Is this price ceiling binding in your market for donuts? Carefully explain how you came to your answer. (b) If this price ceiling is binding, how many donuts will be sold in this market following its imposition, and at what price? (c) If this is a binding price ceiling, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this shortage or surplus.
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