The demand curves for both goods "F" and "G" slope downwards-and-to-the-right. The government installs a price...

The demand curves for both goods "F" and "G" slope downwards-and-to-the-right. The government installs a price ceiling in the market for good "F" at the equilibrium price and a price floor in the market for good "G" at the equilibrium price. Now, assume there is a decrease in the wages paid to the workers who produce good "F" and good "G". As a result, the market price of good "F" will (increase / not change / decrease) and the market price of good "G" will (increase / not change / decrease).

Solutions

Expert Solution

Good F: Price-ceiling at the initial equilibrium price

As a result of a decrease in the wages of labor, the supply curve shifts to the right. The new equilibrium price is below the price ceiling(the price ceiling is not binding on the downward movement of prices).

The market price of Good F will decrease.

Good G: Price floor at the initial equilibrium price

As the supply shifts to the right, the equilibrium price tends to move downwards but a price floor is binding on any downward movement of prices and hence, the price would be at the effective price floor.

The market price of Good G will not change.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

The price elasticity of demand equals the slope of the demand curve. t/f

can you help me with these microeconomics t/f questions.The price elasticity of demand equals the slope of the demand curve. t/fthe larger the portion of a persons total budget spent on a good, the more inelastic the demand for the good. t/fif the demand for farm products is income elastic; that would mean that farm products were necessity. t/ffor hockey memorabilia fans, the puck with which Sidney Crosby scored the Golden Goal in 2010 is perfectly elastic In supply. t/fif...

f the supply and demand curves intersect at a price of $7, then any price above...

f the supply and demand curves intersect at a price of $7, then any price above that would result in: A) equilibrium B) an increase in demand C) a surplus. D) a shortage. Suppose due to a faster than usual decrease in population, there is an excess supply for water in Manitoba. This means that we can expect the price of water to increase in Manitoba over time. Question 39 options: A) True B) False

On the graph below, draw the demand curves for widgets, both before and after the government...

On the graph below, draw the demand curves for widgets, both before and after the government announces that anyone buying a widget will be subject to a new stiff tax. On the graph below, draw the demand curves for apples, both before and after a sharp increase in the price of apples. On the graph below, draw the demand curves for bananas, both before and after a new law requires banana peels to be recycled. Assume that the recycling center...

1. T/F/Explain Price elasticity of demand is measured using the slope of the demand curve. 2....

1. T/F/Explain Price elasticity of demand is measured using the slope of the demand curve. 2. Our company, Slim ‘N Trim, Inc. sells pants for $40 a pair. After a successful year, you decide to try raising the price to $60. Your observation: sales drop from 50 pairs to 40. What is your price elasticity of demand calculated using the midpoint formula? 3. After observing the value of your elasticity, does increasing your price increase, decrease, or have no effect...

Compare the price elasticities of demand at every price for the two demand curves: x1 =...

Compare the price elasticities of demand at every price for the two demand curves: x1 = 450 - p1 and x1 = 150 - 1/3 p1. Explain your answer using a graph.

If f and g are both differentiable functions. If h = f g, then h'(2) is: ___________________

If f and g are both differentiable functions. If h = f g, then h'(2) is: ___________________ Given the function: y=sin(4x)+e^-3x and dx/dt = 3 when x=0. Then dy/dt = ________________ when x=0. Let f(x) = ln (√x). The value of c in the interval (1,e) for which f(x) satisfies the Mean Value Theorem (i.e f'(c)= f(e)-f(1) / e-1 ) is: _________________________ Suppose f(x) is a piecewise function: f(x) = 3x^2 -11x-4, if x ≤ 4 and f(x) =...

True or False: The value of the price elasticity of demand is equal to the slope of the demand curve.

4. Elastic, inelastic, and unit-elastic demand The following graph shows the demand for a goodFor each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic, (approximately) unit elastic, or inelastic. True or False: The value of the price elasticity of demand is equal to the slope of the demand curve.

True or False: The value of the price elasticity of demand is not equal to the slope of the demand curve.

Elastic, inelastic, and unit-elastic demand The following graph shows the demand for a good. For each of the regions, use the midpoint method to identify whether the demand for this good is elastic, (approximately) unit elastic, or inelastic. Region Elastic Inelastic Unit Elastic Between X and Y Between W and X Between V and Z True or False: The value of the price elasticity of demand is not equal to the slope of the demand curve. True False

A government subsidy on ethanol production will shift: A.) demand to the right B. Demand to...

A government subsidy on ethanol production will shift: A.) demand to the right B. Demand to the left C). Supply to the right D). supply to the left An increase in the price of a good causes a: A). rightward shift in the supply curve B). movement up the supply curve C). movement down the supply curve D). leftward shift in the supply curve An increase in the technology of producing a good will: A). shift supply to the left...

What is the relationship--if there is one--between the price elasticity of demand and the slope of...

What is the relationship--if there is one--between the price elasticity of demand and the slope of the demand curve

Subjects