ISDS 3115 Chapter : ChS7
15 Mar 2019
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Today"s menu: monday 16 june 2014: business, practice problems, chapter 5: 1, 2, 4, 5, 7, 8, 10, chapter 6: 1-4, 7-10, 12, 14, 18-20, first exam: next time. A price ceiling can only be binding if it is set under the equilibrium price. If ceiling is enforced, our current price is too high and therefore not allowable. When that happens, the price has to go down quantity demanded increases quantity supplied decreases quantity transacted goes down => persistent shortage. A floor price to be binding has to be set above the equilibrium price. If the floor price is enforced, our current price is too low and it will pushed up. When that happens, the price goes up quantity demanded decreases quantity supplied increases . Quantity transacted goes down => persistent surplus: elasticity = responsiveness in the face of a given action.
