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 1 c Complete the table below and submit the completed table in your answer TaxPrice paid by Buyers Price received by SellersQuantity of masks sold0 $1 on buyers $1 on sellers If the tax is $1 and it is on buyersWhat is the tax burden of buyers? Make your calculations clear. 3.525-Demand1- SupplyPensfuantyof Bna52.Price of a Pondollor

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Answered: Seeing the huge demand for pens, the…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter4: Demand, Supply, And Markets

Section: Chapter Questions

Problem 3.4P

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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

1 c Complete the table below and submit the completed table in your answer

Tax	Price paid by Buyers	Price received by Sellers	Quantity of masks sold
0
$1 on buyers
$1 on sellers

If the tax is $1 and it is on buyers
- What is the tax burden of buyers? Make your calculations clear.

3.5
25
-Demand
1- Supply
Pens
fuantyof Bna
5
2.
Price of a Pondollor

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