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For each of the following scenarios, use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and...

For each of the following scenarios, use a supply and demand diagram to illustrate the effect of the given shock on the equilibrium price and quantity in the specified competitive market. Explain whether there is a shift in the demand curve, the supply curve, or neither.


a)     The US government has introduced a price cap on steel a couple of years ago. The excess demand for steel has resulted in many complaints by lobbying groups in Washington, and to please these, the government raises the price cap on steel from $100/ton to $125/ton. This is however still below the free market price of $150/ton. Show the effect on the market for steel.

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2 comments
  • Thank you. Success in your studies. Goodbye and take care.
    • AdanHill
    • Apr 13, 2017 at 11:25am
  • Thank you i hope this is helpful.
    • somjitcooperinc
    • Apr 13, 2017 at 11:42am

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Supply and demand diagram illustrating the effect of the given shock on the equilibrium price and quantity in the specified competitive market.docx

Supply and demand diagram illustrating the effect of the given shock on the
equilibrium price and quantity in the specified competitive market
An increase in demand shifts price upwards and volume...

1 comment
  • I wish you well and care for you as my student
    • profpauljames1451
    • Apr 14, 2017 at 3:25am

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