Argosy Module 4 Assignment 3 Essay
A doctoral student has just completed a study for her dissertation and found the following demand and supply schedules for hand held computers to be as follows: Price/Computer | Quantity Demanded | Quantity Supplied | $200 | 1000 | 2200 | 175 | 1250 | 2050 | 150 | 1500 | 1900 | 125 | 1750 | 1750 | 100 | 2000 | 1600 | 75 | 2250 | 1450 | 50 | 2500 | 1300 | 25 | 2750 | 1150 |
1. Using Microsoft Excel, draw a graph illustrating the supply and demand in this market. 2. What is the equilibrium Price and Quantity in the market? 3. Now suppose the government imposes a special tax on these computers. Describe what would happen in this market …show more content…
IV. If the government imposes a price ceiling of $100 to this market and since $125 was the equilibrium price, the computer then will be perceived to be a bargain and demand will increase, this heavy demand will consume the available stock in the market much faster than before and will prompt the supplier to produce more but if the cost of producing will render producing not profitable, suppliers might opt to limit production hence supply will go down. This should trigger an increase in price but if the price ceiling is still imposed then there would be no price adjustment. The demand will continue to be strong but because of the intervention prices will remain the same and supply will remain down to a point that there might be scarcity in the market or supply will be critically be low.
V. Setting a price floor of $150 in this market where we know $125 is