Question

NEED HELP PLEASE HELP ME !!!!

Hint: not all Letters on the Graph are used for answers! Yes -Iam trying to trick you. $P IW $100 $70 $60 $40 $20 0 50 75 100 125 160 175 Q Assume: Sellers put the Price for the angelfish, at $100. 1. What is the "effective" Quantity? 2. What is happening, at this Price? 3. How much of one? 4. Will the Price tend to rise or fall? 5. If this price is imposed by the government (legal force) what is this type of Price Control called?

Answer 1

Question 1

At price of $100 per fish, quantity demanded is 50 fish and quantity supplied is 160 fish.

When the quantity demanded is not equal to the quantity supplied at a given price, lower of the two is the effective quantity.

Quantity demanded is lower.

So,

The "effective" quantity is 50 fish.

Question 2

At price of $100 per fish, quantity supplied (160 fish) exceeds the quantity demanded (50 fish).

When the quantity supplied exceeds the quantity demanded, surplus is created.

So,

At this price, surplus is being created in the market.

Question 3

Calculate Surplus -

Surplus = Quantity supplied - Quantity demanded = 160 fish - 50 fish = 110 fish

So,

There is surplus of 110 fish.

Question 4

When there is surplus in the market, there is downward pressure on the price.

So,

The price will tend to fall.

Question 5

When the government imposes a price that is more than the equilibrium price then, in that case, such price is called price floor.

So,

This type of Price Control is called Price Floor.