Module 1_Assignment 3
Assignment 3: Supply, Demand, & Government in the Markets
1. Using Microsoft Excel, draw a graph illustrating the supply and demand in this market.
2. What is the equilibrium Price and Quantity in the market?
This is where the quantity demanded and the quantity supplied are equal. The corresponding price is the equilibrium price and the quantity is the equilibrium quantity.
*Let us take the first line of data from the Spreadsheet as an example:
Price- $200 Quantity Demanded- 1000 Quantity Supplied- 2200
Here there is an excess supply amount, so there are more computers than that are actually wanted. At this point, the sellers would recognize there are ...view middle of the document...
4. Disregard the new tax from number three. Now assume the government imposes a price ceiling of $100 in this market, as the result of protest of price gouging by sellers. What would happen to the price and quantity in this market?
A price ceiling is a government-levied maximum rate for a product or good. When a price ceiling inflicted by the government is more than retail equilibrium price, the price ceiling has no effect on the market or economy. This is because it does not obstruct supply, nor does it boost the demand. A different effect transpires if the government imposes a price ceiling below the market’s equilibrium rate. The suppliers will no longer be capable of charging the price that the market mandates, but they are required to meet the maximum price determined by the government’s price ceiling. When the demand rises beyond the capability to supply, shortages ensue. This leads to rationing of the product, causing some consumers to experience longer lines to obtain the product. In a worse case, there would be no products available for the consumer to buy.
5. Assume that the manufacturers of this product lobby the government’s lawmakers, in terms of this product being essential for college students but they are considering halting production due to the lack of profits. The lawmaker’s agree and now set a price...