M1A3
Supply, Demand & Government in the Market
Argosy University/Atlanta
ECO201 BLB
10.12.14
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?
The equilibrium price is $125 and the quantity in the market is 1750/
3. Now suppose the government imposes a special tax on these computers. Describe what would happen in this market in terms of the supply and demand curve.
If the government were to raise taxes on these computers the demand for them would fall, which would cause the suppliers to have more product then they need.
4. Disregard the new tax in part three. Now assume that the government imposes a price ceiling of $100 in this market, as a result of protests of price gouging by the sellers. What would happen to the price and quantity in this market?
Since the price is somewhat moderate, the demand for the product rises, but the amount of product supplied is not enough to go around. Lower price means higher quantity.
5. Disregard the events of part four. Assume that the manufacturers of this product lobby the government’s lawmakers, in terms of this product being an essential for college students but they are considering halting production due to the lack of profits. The lawmakers agree and now set a price floor at $150. What would happen in this market?
The whole idea would fail, not only because you have raised the price for this product you now have a lower demand and a higher quantity that is supplied, which will cause the makers to loose money because you no longer have a large number of buyers, and the product is just sitting on the shelf.
6. If consumers’ expectations were such that they were concerned about the economy and jobs, what would you think would happen in this market?
If the people opinions even mattered I think that in this case prices would remain as one that is steady
Argosy University/Atlanta
ECO201 BLB
10.12.14
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?
The equilibrium price is $125 and the quantity in the market is 1750/
3. Now suppose the government imposes a special tax on these computers. Describe what would happen in this market in terms of the supply and demand curve.
If the government were to raise taxes on these computers the demand for them would fall, which would cause the suppliers to have more product then they need.
4. Disregard the new tax in part three. Now assume that the government imposes a price ceiling of $100 in this market, as a result of protests of price gouging by the sellers. What would happen to the price and quantity in this market?
Since the price is somewhat moderate, the demand for the product rises, but the amount of product supplied is not enough to go around. Lower price means higher quantity.
5. Disregard the events of part four. Assume that the manufacturers of this product lobby the government’s lawmakers, in terms of this product being an essential for college students but they are considering halting production due to the lack of profits. The lawmakers agree and now set a price floor at $150. What would happen in this market?
The whole idea would fail, not only because you have raised the price for this product you now have a lower demand and a higher quantity that is supplied, which will cause the makers to loose money because you no longer have a large number of buyers, and the product is just sitting on the shelf.
6. If consumers’ expectations were such that they were concerned about the economy and jobs, what would you think would happen in this market?
If the people opinions even mattered I think that in this case prices would remain as one that is steady