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(solved) Economics - Assignment PDF

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Added on  2020-03-16

(solved) Economics - Assignment PDF

   Added on 2020-03-16

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Running head: ECONOMICS1Economics AssignmentName:Institution:Date:
(solved) Economics - Assignment PDF_1
ECONOMICS2Effects of price ceiling on Demand and supplyA price ceiling occurs when a cap is put by the government to put a legal limit on the price ofa particular product. In this case, the federal government of the island of Experimentia has put price ceiling on tertiary education and it has highly regulated the education sector. This is because the federal government wanted to keep the education cost to be low(Perry, 2010).However, in order for the effective price ceiling to work the prices must be set to be below the natural market equilibrium. A shortage occurs immediately when the price ceiling is set. When a price ceiling is set by the federal government, there is more demand than there is at the prices set at equilibrium. The supply is also less than the prices at equilibrium prices thus the quantity that is demanded is more than the quantity that is in supply(Vanichjakvong, 2002). The government has put price ceiling on tertiary education so that the people cannot be exploited by paying high cost on the education services. The effect of this ceiling on demand is that it creates more demand on education and therefore stretching the resources of education facilities. The supply remains low for the tertiary education. Effects on prices are that due to the government regulation, the prices will be constant as the regulation seeks to set the prices fixed. Inefficiencies occur when the marginal benefit tends to exceed the marginal cost at the ceiling cost for the quantity supplied(Dasgupta, 2010).
(solved) Economics - Assignment PDF_2
ECONOMICS3This graph Price changes and effect on supply demand and priceFundamentally prices affect the market. Demand and supply are affected by changes in pricesof a commodity. The federal republic of Experimentia removed the price cap ceiling and this was the net effect of the market. If the prices are regulated the demand and supply will determine the net effect in quantity demanded and supplied. This is shown in that, if the demand for tertiary education is high, the prices will remain high due to many people willing to get the services or get into the schools. If the supply is high, the prices will fall as many tertiary institutions will lower their prices to attract more students or buyers in the market. The reverse will be true and the , the lower the supply the higher the prices as the demand will increase for tertiary education. The effect on prices will depend on whether the demand is high or low and whether the supply is high or low.
(solved) Economics - Assignment PDF_3

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