Question

the demand and supply schedules for pop in Vancouver

5. (3)In order to allow affordable access to all provincial narks, the government tries to market prices. This could be seen as an example of a price ceiling. Discuss the en price, availability, fairness, winners and losers using a suitable diagram. Assume th market price of a campsite at Manning park in the summer would be $30 a nien, government sets a price of $25 a night. e government tries to set below price ceiling. Discuss the effect on the table diagram. Assume that the free 6. (3) Analyze the following statement: Federal farm price supports can never achie ove equilibrium price floors that are established by the Ministry of Agriculture invariably create surpluses, which in turn drive prices back down to their original equmon "price supports can never achieve their goals

Answer 1

As per rules and time constraint, only first question is allowed. Kindly ask other question separately. Thank you.

Ans) Price control are the measures adopted by the government to help underprivileged group. It is of two types ÷ price ceiling and price flooring.

Price flooring is the legal minimum price that must be paid. An effective price floor should be above the equilibrium price. Eg- minimum wage.

Price ceiling is the legal maximum price that can be charged. An effective price ceiling should be below the equilibrium price.

An effective(binding) price ceiling creates shortage in the market as quantity demanded exceeds quantity supplied. It decreases producer surplus i.e producers or sellers are at loss and increases consumer surplus i.e buyers are benefitted. But it also creates inefficiency in the market known as deadweightloss and overall society is at loss.

It is fair for government to fix a legal price in case the prices are too high, to protect people from unnecessary over pricing. Here, people have right to access the park, since paying capacity of every citizen is not same, to protect them, it is fair for the government to fix a price.

Consumer surplus Producer surplus

# Q3-Q2 = shortage to Consumer surplus consumer Deadweightloss Producer surplus@z5 +Q3