Suppose that the market equilibrium price for a basic


Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40. a. Is this a price floor or a price ceiling? b. Draw a graph to illustrate the implementation of the policy. c. What happens to the number of check-ups in the market? Show on your graph. d. What happens to consumer surplus in the market? What happens to producer surplus? Show on your graph.

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Business Economics: Suppose that the market equilibrium price for a basic
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