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We are studing Principles of Microeconomics, Ch. 4: The Market Forces of Supply and Demand this...

We are studing Principles of Microeconomics, Ch. 4: The Market Forces of Supply and Demand this week. I need help on the below.

Can you relate the real-world events that might be responsible for prices changes to any of the events responsible for either supply or demand shifts?

ALSO we are reading Principles of Microeconomics, Ch. 6: Supply, Demand, and Government Policies and I need help with the below as well

What are some examples of price ceilings and what do you think about the use of price ceilings or floors?

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Answer #1

In real world demand curve shift can take place when the disposable income is affected. If disposable income is reduced due to increase in taxes then the demand curve will shift downward towards the left and if disposable income increases due to subsidy then demand curve shift upward towards the right.

Price ceiling is the legal maximum price for a good imposed by the government when they wish to make some good or service available at affordable price to all. For example rent control is imposed to make the housing affordable for all.

Price floor is the legal minimum price imposed by the government. For example, minimum wages.

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