Chapter 3: Q 28. (page 78)
How does a price ceiling set below the equilibrium level affect quantity demanded and quantity supplied?
Quantity demanded exceeds quantity supplied due to a price ceiling set below the equilibrium level, resulting in a shortfall or excess demand.
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A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis, how do you think the tariff reduction will affect the equilibrium price and quantity of flat screen TVs?
What is consumer surplus? How is it illustrated on a demand and supply diagram?
If the price is above the equilibrium level, would you predict a surplus or a shortage? If the price is below the equilibrium level, would you predict a surplus or a shortage? Why?
Can you propose a policy that would induce the market to supply more rental housing units?
How does a price floor set above the equilibrium level affect quantity demanded and quantity supplied?
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