Homework 2 - The Colorado College Department of Economics...

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1 The Colorado College Department of Economics and Business Block 5 Econ 151 Homework #2 1. Use the following supply-demand schedules to answer the questions below: Price Quantity demanded Quantity supplied 300 60 30 400 55 40 500 50 50 600 45 60 700 40 70 800 35 80 (a) Plot the demand and supply curves for bicycle. What is the equilibrium price and quantity? (b) In response to lobbying by the Bicycle Riders Association, a price ceiling of $700 is placed on bicycles. What effect will this have on the market for bicycles? Why? (c) Now starting from (a) Congress places a price ceiling of $400 on bicycles. What is the result of a price ceiling of $400 on bicycles? (d) Does a price ceiling of $400 on bicycles make all bicycle buyers better-off? Why or why not? (e) Now suppose in response to Bicycle Manufacturer’s Association Congress imposes a price floor on bicycles of $700. What is the result of the $700 price floor? (2x5 = 10 points)
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This homework help was uploaded on 04/19/2008 for the course EC 151 taught by Professor Ghosh during the Spring '08 term at Colorado College.

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Homework 2 - The Colorado College Department of Economics...

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