-The table above gives the supply and demand schedules for scooters. Because of increased injuries sustained by children riding scooters, Citizens Against Scooter Accidents successfully lobbies the government to impose a price floor of $80.00 on scooters.
a) What is the quantity demanded and supplied after the price floor has been imposed?
b) Is there any shortage or surplus at this price floor? If so, how much?
c) If the price floor is raised to $110.00, what is the quantity demanded and supplied?
d) At a price floor of $110.00, is there any shortage or surplus? If so, how much?
Definitions:
Opportunity Cost
is the value of the next best alternative forgone as a result of making a particular choice, highlighting the trade-offs in decision-making.
Absolute Advantage
The ability of a country or individual to produce a good or service more efficiently than others, using fewer resources.
Terms Of Trade
How much of one good exchanges for a unit of another good.
Comparative Advantage
The ability of a country or entity to produce a particular good or service at a lower opportunity cost than others, leading to more efficient international trade.
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