Which of the following would increase quantity supplied,...

Which of the following would increase quantity supplied, decrease quantity demanded, and increase the price that consumers pay? a. the imposition of a binding price floor b. the removal of a binding price floor c. the passage of a tax levied on producers d. the repeal of a tax levied on producers

Transcript

00:01 Hello, so i'm going to answer your question about which specific element in the economic will cause these three characteristics for doing so i'm going to use a graphical representation so in this graph you can see a supply and demand curve the vertical axis will have the price and the horizontal axis will have the quantity the supply have a positive relationship which means that a higher price there will be more companies willing to offer that product and the demand have a negative relationship which means that a low higher price there will be less individuals willing to consume that good.

00:35 So which element will increase the quantity supply, decrease the quantity demand and increase the price? so the answer is a imposition of a binding price floor and i'm going to explain it.

00:45 So this would be a binding price floor.

00:50 Why? because it's above the equilibrium market because if it's above here it's binding and a price floor is the one that set a higher price.

00:59 So as you can see the demand decrease so the demand was originally here.

01:06 This was where the quantity was demanded was equal to the quantity offer.

01:12 Now this will decrease the quantity demand, so this will be now the quantity demand that as you can see is smaller.

01:17 So quantity demand that is smaller and increase the quantity supply.

01:23 So in this case there will be more individuals willing to offer the product but there is not going to be consumption.

01:29 And as you can see also, we pass from price zero to price one...

Question

Which of the following would increase quantity supplied, decrease quantity demanded, and increase the price that consumers pay? a. the imposition of a binding price floor b. the removal of a binding price floor c. the passage of a tax levied on producers d. the repeal of a tax levied on producers

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