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The equilibrium price is
$100
and the equilibrium quantity is
300
.
Suppose the government imposes a price ceiling of $120. This price ceiling isnot binding , and the market price will be
$100
. The quantity supplied will be
300
, and the quantity demanded will be
300
. Therefore, a price ceiling of $120 will result inneither a shortage nor a surplus .
Suppose the government imposes a price floor of $120. This price floor isbinding , and the market price will be
$120
. The quantity supplied will be
240
and the quantity demanded will be
280
. Therefore, a price floor of $120 will result ina shortage .
Instead of a price control, the government levies a tax on producers of $40. As a result, the new supply curve is:
QS
=
3(P−40)
With this tax, the market price will be
$
, the quantity supplied will be
, and the quantity demanded will be
. The passage of such tax will result in .
Sagot :
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