Price ($) Quantity Demanded Quantity Supplied 0 25 0 1 21 1 2 17 3 3...

Price ($)	Quantity Demanded	Quantity Supplied
0	25	0
1	21	1
2	17	3
3	13	6
4	9	9
5	5	12
6	1	15
7	0	18

Question: Suppose the government sets a price in this market at $2.

a. Is this a price floor or a price ceiling?
b. Does this create a shortage or surplus?
c. What is the difference in quantity demanded at this $2 price relative to the market price?
d. What is the difference in quantity supplied at this $2 price relative to the market price?
e. Who benefits and who is harmed by this policy (consumer/producers)?

Expert Solution

Rahul Sunny answered 1 year ago

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