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a price ceiling set below the market equilibrium creates an excess demand, leading to a shortage of the good. Think about it like this, if a good is a lot cheaper than it should be, more people would want to buy it, but less people would want to make it, since its so cheap.
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∙ 13y ago
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What do you have when the actual price in a market is below the equilibrium price?
Excess Supply
What is a maximum price set below the equilibrium price?
Price Floor.
Binding price floor in a market sets price?
below equilibrium price and causes a shortage
What are the concequences of implimenting minumum or maximum prices for goods and services?
When a maximum price is set for a good or service, it is set below the equilibrium. This is supposed to help consumers but due to the excess demand, a black market will emerge and goods and services will be sold at black market prices (which will be higher than the maximum price or price ceiling) A minumum price is set abouve the equlibrium price. This is done to help producers, however all this will do is create an excess supply and a black market will emerge where goods will be sold at a lower price.
Why price ceiling and price floor is binding?
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
What do you have when the actual price in a market is below the equilibrium price?
Excess Supply
What is a maximum price set below the equilibrium price?
Price Floor.
The maximum displacement of a particle within a wave above or below its position is called amplitude?
equilibrium amplitude
Binding price floor in a market sets price?
below equilibrium price and causes a shortage
The maximum displacement of a particle within a wave above or below it's blank position is called amplitude?
equilibrium amplitude
What are the concequences of implimenting minumum or maximum prices for goods and services?
When a maximum price is set for a good or service, it is set below the equilibrium. This is supposed to help consumers but due to the excess demand, a black market will emerge and goods and services will be sold at black market prices (which will be higher than the maximum price or price ceiling) A minumum price is set abouve the equlibrium price. This is done to help producers, however all this will do is create an excess supply and a black market will emerge where goods will be sold at a lower price.
Why price ceiling and price floor is binding?
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
When a surplus of a product will arise when price is above equilibrium or below equilibrium?
above equilibrium
The equilibrium constant for the reaction below is 0.625 At equilibrium O2 0.40 and H2O 0.20 What is the equilibrium concentration of H2O2?
0.16
What situation can lead to excess demand?
Scarcity of the product, or if the price of the product has dropped. JohnnyChampagne's answer: When quantity demanded is more than quantity supplied. When the actual price in a market is below the equilibrium price, you have excess demand, because a low price encourages buyers and discourages sellers.
A shortage will develop when?
The market price is below the equilibrium price.
The equilibrium constant for the reaction below is 0.49 At equilibrium O2 equals 0.11 and N2 equals 0.15 What is the equilibrium concentration of NO?
0.09
