Chapter 4 - Chapter 4 Activity 1. A recent study found that...

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Chapter 4 Activity 1.A recent study found that the demand and supply schedules for Frisbees are as follows: Price Per Frisbee Quantity Demanded Quantity Supplied 11 1 15 10 2 12 9 4 9 8 6 6 7 8 3 6 10 1 a.What are the equilibium price and quantity of Frisbees? Price $8, quantity 6 b.Frisbee manufacturers persuade the government that Frisbee production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $2 above the equilibrium price. What is the new price? How many Frisbees are sold? Price = $10, quantity sold = 2, surplus of 10 c. Irate college students march on Washington DC and demand a reduction in the price of Frisbees. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $1 below the former price floor. What is the new market price? How many Frisbees are sold? Ceiling at $9 is nonbinding, thus we return to the equilibrium – stuck at $8 market price; 6 units
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This note was uploaded on 09/21/2008 for the course ECON 101 taught by Professor Myers during the Spring '08 term at William & Mary.

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Chapter 4 - Chapter 4 Activity 1. A recent study found that...

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