a) Define the term maximum price legislation.
b) Describe the idea by using an appropriate diagram.
c) Trace out the welfare effects of such exercise.
a) Describe the idea of minimum price legislation.
b) Describe the idea by considering the labor market.
c) Compute the welfare effects of this exercise.
a) If a specific tax is imposed then illustrate that for the buyer the price increases, for the seller the price drops.
b) Let consider a competitive market for wheat. Determine the impact of a price support program (price floor) on the quantity demanded and supplied. Do you think that the price support is responsible for over-production?
c) In the similar market if the government decides to follow a price contact policy, then what would be the impact on the quantity of wheat produced and the related welfare impacts?
a) Examine the economic effects of tariff.
b) Describe the conditions beneath which quota is equivalent to the tariff.
a) Differentiate between the market equilibrium and changes in the market equilibrium.
b) Under what conditions will change in market equilibrium lead to raise in both price and quantity?