Question

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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

From the graph

1) At price of 100$ the effective quantity is 50 which is point N

2) At this price the demand is falling thus reducing the quantity of angle fishes that are being purchased.

4) price will tend to fall as the quantity of demand is decreased. Thus when demand for any good decrease than price will automatically fall.

5) The price control is called price ceiling which is made by government where beyond that price the seller cannot sell the product.

13) At price of 60$ the effective quantity is 125 as that is the quantity demanded by the consumer.

14)At this price of 60$ people are demanding more than the price of 100$. Thus if the price is decreasing the demand is increasing.

16) The price will tend to raise as the seller will not be able to get profit if still price goes down.

17)The above Price control made by the government is price floor where it is the lowest legal price that should be paid by consumer. Below that price seller should not sell.