Question

Table 5-5 Price Per         Gallons Demanded        Gallons Supplied Gallon                Per Month&nbsp

Table 5-5
Price Per         Gallons Demanded        Gallons Supplied
Gallon                Per Month                   Per Month
$4.00                   400                            1,400
$3.50                   600                            1,100
$3.00                   800                              800
$2.50                1,000                              500
$2.00                1,200                              200
$1.50                1,400                                50
$1.00                1,600                                 0

Refer to Table 5-5. If the government were to remove a price ceiling of $2.00 per gallon in the milk market, the result would be:

A.

a decrease in price and increase in the quantity of milk supplied.

B.

a decrease in price and increase in the quantity of milk demanded.

C.

an increase in both price and the quantity of milk supplied.

D.

an increase in both price and the quantity of milk demanded.

E.

the market price of milk would remain constant and the quantity of milk supplied would equal the quantity demanded. the market price of milk would remain constant and the quantity of milk supplied would equal the quantity demanded. the market price of milk would remain constant and the quantity of milk supplied would equal the quantity demanded.

Homework Answers

Answer #1

C. an increase in both price and the quantity of milk supplied.

When the price ceiling was $2.00, quantity demanded = 1200 and quantity supplied = 200. This means demand excess supply.
When the government removes a $2.00, so equilibrium would be reached. This means when quantity demanded would become equal to the quantity supplied. This happens when quantity = 800 and it is sold at a price of $3.00
So, both price and quantity supplied would increase whereas quantity demanded decrease.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that the quantity demanded and quantity supplied in the market for milk is as follows:...
Suppose that the quantity demanded and quantity supplied in the market for milk is as follows: Price per Gallon Quantity Demanded Quantity Supplied $5 1,000 5,000 $4 2,000 4,500 $3 3,500 3,500 $2 4,100 2,000 $1 6,000 1,000 2.a. What is the equilibrium price and quantity of milk? 2.b. If the government places a price ceiling of $2 on milk, will there be a shortage or surplus of milk? How large will it be? How many gallons of milk will...
The following table depicts the quantity demanded and quantity supplied of studio apartments in a small...
The following table depicts the quantity demanded and quantity supplied of studio apartments in a small college town. Monthly Rent Quantity Demanded Quantity Supplied $600 3000 1600 $650 2500 1800 $700 2000 2000 $750 1500 2200 $800 1000 2400 A) What are the market price and equilibrium quantity of apartments in his town? B) If this town imposes a rent control of $600 per month, how many studio apartments will be rented? C) What do you predict if the rent...
1. The table below shows the quantity demanded and supplied on barley for each price per...
1. The table below shows the quantity demanded and supplied on barley for each price per bushel. Price per Bushel Quantity Demanded per Month (million bushels) Quantity Supplied per Month (million bushels) Sate of the Market (shortage or surplus) $2.30 400 300 $2.40 370 320 $2.50 340 340 $2.60 310 360 $2.70 280 380 a. Based on the information above, plot a chart with supply and demand curves. b. What are the equilibrium price and quantity of barley? c. If...
Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply...
Suppose the equilibrium price of gasoline is $3 per gallon. a. Using the demand and supply graph, draw this equilibrium in the space below. Make this graph large, it will be used for future questions. b. Now suppose the government imposes a binding price ceiling on this market. Identify a value for this price ceiling that would be binding and show it on the graph. Graphically show whether excess demand or excess supply would result. c. With the price ceilings,...
Use the table below depicting the sour cream market for this problem. Quantity Demanded (pounds) Price...
Use the table below depicting the sour cream market for this problem. Quantity Demanded (pounds) Price per Pound Quantity Supplied (pounds) 750 $2.40 910 780 2.30 860 810 2.20 810 840 2.10 760 870 2.00 710 900 1.90 660 In order to ingratiate herself with the voters of Orville, the mayor sets a price ceiling of $2.10 per pound. Suppose that the stock market crashes and, as a result, people in Orville are poorer. This reduces the demand for sour...
Price (Dollars per gallon) Initial Quantity of Barrels per Day Demanded (thousands) New Quantity of Barrels...
Price (Dollars per gallon) Initial Quantity of Barrels per Day Demanded (thousands) New Quantity of Barrels per Day Demanded (Hundreds) $4.00 25 12.5 $3.50 500 250 $3.00 1,000 500 $2.50 1,500 750 $2.00 2,000 1,000 $1.50 2,500 1,250 1B. Why do electric cars cause consumers who are willing to pay $4.00 a gallon to decrease?
the per-unit standards for direct materials are 5 gallons at $6 per gallon. Last month, 28,000...
the per-unit standards for direct materials are 5 gallons at $6 per gallon. Last month, 28,000 gallons of direct material that actually cost $176,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was?
question 3 The following table describes the market for waffles. Price Quantity Demanded Quantity Supplied $1...
question 3 The following table describes the market for waffles. Price Quantity Demanded Quantity Supplied $1 110 20 $2 90 60 $3 70 100 $4 50 140 Use the information in the table to find the equilibrium price and quantity in this market For price please enter your answer as a numerical response rounded to the nearest cent (ie. 5.00 or $5.50 not 5 or "Five dollars"). For quantity please enter your answer as a whole number (ie. 60 not...
Quantity Quantity Quantity Quantity Price per Demanded Supplied Demanded Supplied TV in United States in United...
Quantity Quantity Quantity Quantity Price per Demanded Supplied Demanded Supplied TV in United States in United States in Japan in Japan (dollars) (thousands) (thousands) (thousands) (thousands) 200 100 10 100   25 300   85 20   85   50 400   75 35   70   70 450   65 45   65   85 500   50 50   50   90 550   40 60   40 100 600   30 70   30 110 650   20 80   20 120 Table 18-4 presents the demand and supply schedules for television sets in Japan and...
November 2018 price per gallon: $2.79 gallons sold: 12,500 November 2019 price per gallon: $2.24 gallons...
November 2018 price per gallon: $2.79 gallons sold: 12,500 November 2019 price per gallon: $2.24 gallons sold: 14,250 A. Explain how you would calculate the price of elasticity if demand of gasoline. B. Explain how consumer and producer surplus will change as a result of this price change. C. Explain the elasticity of supply for gasoline. (If prices go up, how quickly would the supply of gasoline increase) D. Discuss whether you feel the demand for gasoline is elastic, inelastic,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT