Economics Assignment: Price Floors & Taxes

This Economics assignment explores the impacts of price floors, taxes, and changes in demand on coffee markets. It includes answers to three questions (18-20), utilizing diagrams and referencing relevant economic principles from sources like Bernanke et al. (2015) and Taussig (2013). The assignment provides insights into how market equilibrium is affected by these factors.

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Authors note
Course ID

1ECONOMICS
Table of Contents
Answer 18..................................................................................................................................2
Answer 19:.................................................................................................................................2
Answer 20..................................................................................................................................3
Reference list:.............................................................................................................................4

2ECONOMICS
Answer 18
a. Price floor will restrict the excess supply by using a quota system
Figure 1: Demand and Supply
(Source: Bernanke, Antonovics and Frank 2015)
b. Price ceiling on coffee can make the demand of coffee beans increase in the market
with movement of consumer taste towards coffee
Answer 19:
a. Implementing tax on coffee will result in rise in price and this will lead to increase in
the quantity supplied with fall in demand.

3ECONOMICS
Figure 2: Equilibrium price and quantity
(Source: Taussig 2013)
b. Due to the increase in the price after imposing tax on coffee the future prices and
future spot of coffee will be co-integrated.
Answer 20
a. If the demand curve shifts will represent an increase in demand the equilibrium price
and quantity will increase
b. The strike will have least sustain economic efficiency at the domestic level.

4ECONOMICS
Reference list:
Bernanke, B., Antonovics, K. and Frank, R., 2015. Principles of macroeconomics. McGraw-
Hill Higher Education.
Taussig, F.W., 2013. Principles of economics (Vol. 2). Cosimo, Inc..