Does a proce ceiling increase or decrease the number of transactions in a market? Why? What...

Does a proce ceiling increase or decrease the number of transactions in a market? Why? What about a price floor?

Expert Solution

Price ceiling is imposed below the equilibrium price and so the quantity demanded would increase at lower prices whereas quantity supplied is decreased at lower prices however as the price is set below the equilibrium price,so the number of transactions will increase in the market.

Price floor is set above the equilibrium price which is imposed to restrict the price at a minimum point and so the producer will charge the minimum price which is more than the equilibrium price.This will reduce the quantity demanded and increase the quantity supplied and as the price is above the equilibrium price it will always decrease the number of transactions in the market.

Both price ceiling and price floor prevents the market from reaching its equilibrium position where supply is equal to demand as both block some transactions that the buyers and sellers would be willing to make which therefore creates deadweight loss.

Rahul Sunny answered 2 years ago

Why does price ceiling mean decrease quality? why does price floor mean Increase in quality?

Explain what an increase and decrease in demand does to equilibrium price and quantities and why?...

Explain what an increase and decrease in demand does to equilibrium price and quantities and why? Then, explain what an increase and decrease in supply does to equilibrium price and quantities and why?

Why does a price ceiling create a black market? Why does a price floor create a...

Why does a price ceiling create a black market? Why does a price floor create a grey market?

what types of transactions increase and decrease contra asset accounts ?

Does union increase or decrease efficiency? Does union increase or decrease wage inequality? Discuss.

Does the number of moles of products increase, decrease, or remain the same when each of...

Does the number of moles of products increase, decrease, or remain the same when each of the following equilibria is subjected to an increase in pressure by decreasing the volume? 1- CO(g)+H2O(g)⇌CO2(g)+H2(g) 2- 2CO(g)⇌C(s)+CO2(g) 3- N2O4(g)⇌2NO2(g) _______________________________________________ Ethyl acetate, a solvent used in many fingernail-polish removers, is made by the reaction of acetic acid with ethanol: CH3CO2H(soln)Aceticacid +C2H5OH(soln)Ethanol⇌CH3CO2H(soln)Ethylacetate+H2O(soln)ΔH∘=−2.9kJ Part A Does the amount of ethyl acetate in an equilibrium mixture increase or decrease when the temperature is increased? increase decrease...

1)Assume there is a decrease in the price of a complement, an increase in income, a decrease in the number of firms, an increase in the cost of input

1)Assume there is a decrease in the price of a complement, an increase in income, a decrease in the number of firms, an increase in the cost of input, firms expect a higher price, and consumers expect a lower price. Based on all of this information, which of the following is correct? A)The equilibrium price will increase, and the equilibrium quantity will increase. b)The equilibrium price will decrease, and the equilibrium quantity will decrease. c) More information is needed to know...

1. Why does WACC increase and IRR decrease as the capital budget increases? Are there any...

1. Why does WACC increase and IRR decrease as the capital budget increases? Are there any steps management can take to reverse these trends? 2. How should a company prioritize all of its capital project opportunities? In responding invoke the various methodologies learned this week and how to use them for ranking projects.

1. Why does WACC increase and IRR decrease as the capital budget increases? Are there any...

1. Why does WACC increase and IRR decrease as the capital budget increases? Are there any steps management can take to reverse these trends? 2. How should a company prioritize all of its capital project opportunities? In responding invoke the various methodologies learned this week and how to use them for ranking projects.

Indicate the effect of the following transactions by showing whether there is an increase, decrease or...

Indicate the effect of the following transactions by showing whether there is an increase, decrease or no effect on the Assets, Liabilities and Owner’s Equity. Do NOT Indicate the specific accounts affected by each transaction. Purchased shares in another company for greater than their book value Purchased inventory on credit Issued additional shares for cash Declared dividends Sold inventory on account Collected cash from creditors Paid for inventory purchased on credit Paid wages in cash Recorded depreciation on equipment Repaid...

Question

Does a proce ceiling increase or decrease the number of transactions in a market? Why? What...

Solutions

Expert Solution

Related Solutions

Why does price ceiling mean decrease quality? why does price floor mean Increase in quality?

Explain what an increase and decrease in demand does to equilibrium price and quantities and why?...

Why does a price ceiling create a black market? Why does a price floor create a...

what types of transactions increase and decrease contra asset accounts ?

Does union increase or decrease efficiency? Does union increase or decrease wage inequality? Discuss.

Does the number of moles of products increase, decrease, or remain the same when each of...

1)Assume there is a decrease in the price of a complement, an increase in income, a decrease in the number of firms, an increase in the cost of input

1. Why does WACC increase and IRR decrease as the capital budget increases? Are there any...

1. Why does WACC increase and IRR decrease as the capital budget increases? Are there any...

Indicate the effect of the following transactions by showing whether there is an increase, decrease or...