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Chapter 3: Q 29. (page 78)
Does a price floor attempt to make a price higher or lower?
Price floor attempts to make a price higher.
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Table 3.8 shows the information on the demand and supply for bicycles, where the quantities of bicycles are measured in thousands.
a. What is the quantity demanded and the quantity supplied at a price of \(210?
b. At what price is the quantity supplied equal to 48,000?
c. Graph the demand and supply curve for bicycles. How can you determine the equilibrium price and quantity from the graph? How can you determine the equilibrium price and quantity from the table? What are the equilibrium price and equilibrium quantity?
d. If the price was \)120, what would the quantities demanded and supplied be? Would a shortage or surplus exist? If so, how large would the shortage or surplus be?
When the price is above the equilibrium, explain how market forces move the market price to equilibrium. Do the same when the price is below the equilibrium.
What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the
supply curve for milk.
Agricultural price supports result in governments holding large inventories of agricultural products. Why do you think the government cannot simply give the products away to poor people?
How does one analyze a market where both
demand and supply shift?
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