LectureAssignment04 - 1 ECONOMICS 100 Lecture Assignment #4...

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Lecture Assignment #4 (Interventions in the Market Place) Source: LR11, Chapter 5, page 103 to 110; LR10, Chapter 5, page 105 to 113, and 118- 119. Also LR10, Chapter 4, page 81-83. Some additional concepts are introduced in the lecture. For the following questions, assume positively sloped supply and negatively sloped demand schedules and that the market is " perfectly competitive " prior to any intervention by the government. 1. Maximum Price 1.1 At what level must a maximum price or price ceiling be set in order to have any impact? 1.2 What happens in a market when an effective price ceiling is established: a) to quantity supplied b) to quantity demanded c) to the equilibrium point 1.3 A maximum price could lead to excess demand . What are the ways in which this could be handled? How does a "free" market handle the excess demand situation? 1.4 Is there an incentive to "cheat" i.e. for "black markets" to exist? 1.5
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This note was uploaded on 08/24/2010 for the course ECO 100 taught by Professor Indart during the Fall '08 term at University of Toronto- Toronto.

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LectureAssignment04 - 1 ECONOMICS 100 Lecture Assignment #4...

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