Seeing the huge demand for pens, the government decides to impose price controls on masks. Consider the following two scenarios for part a and for part bSuppose the government imposes a price ceiling at $1.Is it binding? Show whether there shortageor surplus in the demand-supply diagram above. How large is this surplus or shortage? Please Briefly explain your answers to the above. Now, Suppose the government imposes a price floor at $2.Is it binding? Show whether there is a surplus or a shortage in the demand-supply diagram above. How large is this surplus or shortage? briefly explain your answers to the above 3.525-Demand1- Supply+Quanky of Bna4Pens75Price of a Pendollor

Price ceiling is a price control measure imposed by government to protect the consumers from paying…

Answered: Seeing the huge demand for pens, the…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 13RQ: Describe the general appearance of a demand or a supply tune with zero elasticity.

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Seeing the huge demand for pens, the government decides to impose price controls on masks. Consider the following two scenarios for part a and for part b

Suppose the government imposes a price ceiling at $1.
- Is it binding?

Show whether there shortageor surplus in the demand-supply diagram above.

How large is this surplus or shortage?

Please Briefly explain your answers to the above.

Now, Suppose the government imposes a price floor at $2.
- Is it binding?
- Show whether there is a surplus or a shortage in the demand-supply diagram above.
- How large is this surplus or shortage?
- briefly explain your answers to the above

3.5
25
-Demand
1- Supply
+
Quanky of Bna
4
Pens
7
5
Price of a Pendollor

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