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In: Economics

Price control graphs Before the advent of the coronavirus virus, reasonable face masks were selling for...

Price control graphs Before the advent of the coronavirus virus, reasonable face masks were selling for about $2 each. Now that many people are worried about catching this virus, the market has changed. Some local governments have decided that they don’t want the local price of masks to rise very much, so they’ve put in a rule that will keep the market price what it was before the virus outbreak. On a well labeled graph, show the original situation (P=$2, Q=Q0), the effect of COVID-19 breaking out, and what the effect of such a rule would be in terms of the quantity sold, any excess supply or demand, and any possible Dead Weight Loss.

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Rahul Sunny answered 1 year ago
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