Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 3 - Demand, Supply, and Market Equilibrium - Discussion Questions - Page 72: 7

Answer

Case 1 : Price Floor Case 2 : Price Ceiling

Work Step by Step

Case 1: In case 1, the price floor is shown above the equilibrium as represented in the diagram . At this price it will create a surplus of $(Q_{s}-Q_{d})$. Case 2: In case 2, the price ceiling is shown below the equilibrium as represented in the diagram. At this price, it will create a Deficit of $(Q_{d}-Q_{d})$.
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