Q^d= 9.5 - 2p Q^s= 0.6p Price Floor. Suppose that the government imposes a price floor equal to P F = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price floor on this diagram. Is this price floor binding in your market for donuts? Carefully explain how you came to your answer. 1 (b) If this price floor 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 floor, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this
Q^d= 9.5 - 2p Q^s= 0.6p Price Floor. Suppose that the government imposes a price floor equal to P F = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price floor on this diagram. Is this price floor binding in your market for donuts? Carefully explain how you came to your answer. 1 (b) If this price floor 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 floor, does it lead to a shortage or a surplus of donuts? If so, calculate the amount of this
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter8: Understanding Markets And Industry Changes
Section: Chapter Questions
Problem 2MC
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Q^d= 9.5 - 2p
Q^s= 0.6p
Price Floor .
Suppose that the government imposes a price floor equal to P F = 1.60. (a) Draw a diagram showing your market for donuts and indicate the price floor on this diagram. Is this price floor binding in your market for donuts? Carefully explain how you came to your answer. 1 (b) If this price floor 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 floor, 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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