Question 4 (20%)
Examine the following table:
Price ($) Quantity demanded Quantity supplied
a) In the above market what is the initial market equilibrium?
b) If the government sets a price floor at $50 what will be the outcome in this market?
c) Why would the government decide to set a price floor?
Rationale
The purpose of this assessment is to provide an opportunity for you to assess whether you are keeping up with the material in the first few weeks of the subject and to assess your understanding of the material.
