“Government-set prices undermine the rationing function of competitive prices.” Explain carefully in terms of both price...
“Government-set prices undermine the rationing function of competitive prices.” Explain carefully in terms of both price ceilings and price floors.
Thanks!
Homework Answers
ceiling price implies the state can keep prices below the equilibrium price of the economy. Since the market equilibrium is where the amount requested is equivalent to the amount provided, any cost below that exceeds that provided would discover an excess amount demanded. In other words, a shortage would grow and the market would not ration In unregulated competition, this scenario could not continue because competition would drive the price up until the quantity and price equilibrium were reached
A price floor implies that by agreeing to pay that price for any unsold surplus, the government can keep prices above the market equilibrium price. The rationing feature of the competitive price system will not operate Demand, Supply and Market Equilibrium because vendors will have no competitive pressure to lower prices to get rid of the surplus if they can sell it to the state at the supported price.
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“Government-set prices undermine the rationing function of
competitive prices.” Explain carefully in terms of both price...
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following the problems or solving it.
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Government-enforced prices such as price ceilings O A. ration economic resources more efficiently than prices in a market system. O B. disrupt the rationing function performed by prices in a market system. O c. are only imposed on goods where market price has no useful function. OD. aid in the rationing function performed by prices in a market system.
This is a macroeconomics problem. Thanks!
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Please answer question 5. Please solve it in terms of MRS and
price ratio. Explain the steps slowly please because I have trouble
following the problems or solving it.
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