Question

5) Price control is effective or binding if
a) price ceiling is above the equilibrium price
b) price ceiling is below the equilibrium price
c) price floor is at the equilibrium price
d) price floor is below the equilibrium price
6) Imagine a society that produces robots and pizza
a) Draw a production possibilities frontier for robots and pizza. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape.
b) Show changes of the production possibilities frontier when a technology advance for making robots is achieved. Also, what would happen to the opportunity cost of robots in terms of pizza for a given quantity of robots and why.
7) We have seen that goods market equilibrium can be characterized by the expenditures approach of GDP
  a) Describe the goods market equilibrium as Y =
  b) Explain the reason why net exports are included in the goods market equilibrium (the formula for calculating GDP)

Answer 1

5) Price control is effective or binding if
b) price ceiling is below the equilibrium price