Author Question: Suppose the demand for eggs is inelastic and that the market-clearing price is $1.50 per dozen. Now ... (Read 23 times)

llesku · **on:** Oct 12, 2022

Question 1

FIGURE 5-3

Refer to Figure 5-3. If the government imposes a price floor at P3, the result would be a price and quantity combination of

◦ P3 and Q3.
◦ P1 and Q0.
◦ P3 and Q0.
◦ P3 and Q4.
◦ P2 and Q1.

Question 2

Suppose the demand for eggs is inelastic and that the market-clearing price is $1.50 per dozen. Now suppose the government imposes a minimum price of $2.00 per dozen. Why might the government implement such a policy?
◦ to decrease tax revenues from egg farmers
◦ to make consumers better off
◦ to increase the incomes of egg farmers
◦ to reduce excess supply in the egg market
◦ to increase excess demand in the egg market

kuttz · **Reply #1 on:** Oct 12, 2022

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