Which of the following will occur if the government institutes an effective price ceiling on bottled drinks?

1 answer:

5 0

The question asks which of the following, but there are no choices. I don't know if it is supposed to be answered in context to a specific situation, so I'll just explain what happens with price ceilings in general.

Assuming the government sets the ceiling below the equilibrium price (where supply and demand cross), demand will be higher while supply will be lower. This is due to the fact that consumers want to buy more since the drinks are cheaper, and producers want to produce fewer bottles since they are not making as much money. This creates a shortage.

The new quantity supplied will be where the supply curve crosses the horizontal price ceiling line, and the new quantity demanded will be where the demand curve crosses the price ceiling.

If we were to draw the graph of supply and demand, the area to the left of the equilibrium point and between the supply and demand curves represents total surplus. The area above the equilibrium price (NOT the price ceiling) and below demand is consumer surplus because there is extra value that consumers are willing to pay, however they don't have to because the price is lower. The area below the equilibrium price and above supply is producer surplus because The price is higher than the minimum value the producer has for the product.

That being said, with a price ceiling in place, the new price is lower and the quantity supplied is less. That means that there is less total surplus. This results in deadweight loss.

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The new location for a park needs to be exactly 5 miles from the school. When plotted on the coordinate plane, the school is loc

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Answer:

Two possible locations on the coordinate plane for the park is B: (-1, 0) and D: (6, -1)

Explanation:

Since we know the distance must be exactly 5 miles, that means the hypotenuse of the right triangle on the coordinate plane is equivalent to 5. Using this, we can solve which points are possible location points. For point A, the distances from the school would be 6 units left and 6 units down. The Pythagorean Theorem states that the sum of the two legs of a right triangle squared is equivalent to the hypotenuse squared. Since the leg lengths are 6 units, which is bigger than the hypotenuse, you know A is wrong. As for B, the distances from the school is 4 units left and 3 units down. $4^{2}$ + $3^{2}$ = 16 + 9 = 25, and $5^{2}$ = 25, so point B is a possible location on the coordinate plane for the park. Using this method, we can conclude point D is also a possible location, as the two distances are 3 right and 4 down, and you know $3^{2}+4^{2}=25$ . So the correct answers are B and D