Problem:
Using the following schedule, describe the equilibrium price and quantity. Illustrate the condition at the price of $10. What will take place? Illustrate out the situation at a price of $2. What will take place?
|
Price
|
Quantity demanded
|
Quantity supplied
|
|
$1
|
500
|
100
|
|
$2
|
400
|
120
|
|
$3
|
350
|
150
|
|
$4
|
320
|
200
|
|
$5
|
300
|
300
|
|
$6
|
275
|
410
|
|
$7
|
260
|
500
|
|
$8
|
230
|
650
|
|
$9
|
200
|
800
|
|
$10
|
150
|
975
|
Question 1: Assume the government obliged the minimum price of $7 in schedule of question 1. What would take place? Demonstrate.
Question 2: In question 1, point out what the price would have to be to represent the effective price ceiling. Indicate the surplus or shortages that result. Demonstrate a price floor and give an illustration of the price floor.
Question 3: Assess the following statement: "The demand for U.S. oranges has risen because the quality of U.S. oranges demanded in the Japan has increased."