Assume in a simple economic example that a binding/effective price ceiling is implemented and in place,...

Assume in a simple economic example that a binding/effective price ceiling is implemented and in place, in a given market for some good, called “Good X”. Next, an economic change occurs in the market. The economic change that occurs is a decrease in the number of buyers in the market. Assume that this is a competitive market, what will happen to the market selling price and the market quantity that is bought and sold in the market for “Good X”?

Use supply and demand analysis to demonstrate your answer and be sure to provide the rationale behind what is happening and also discuss any interesting observations or outcomes. Finally, please cite an example from the news of a current event in real life that relates to the economic change occurring (i.e. a decrease in the number of buyers in the market) affecting “Good X” above, and be sure to explain why it relates. (Note: The magnitudes of any supply and/or demand shifts in this example are not specified; you may want to consider all possible scenarios)

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Rahul Sunny answered 2 years ago

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