Assume that the market price for a 5kg bag of rice is R80 and the government has announced that a 5kg bag
of rice cannot be sold for less than R100.
With the aid of a well labelled diagram, explain the effect the above government decision will have in the
market for rice.
1
Expert's answer
2018-09-25T09:29:08-0400
If the market price for a 5kg bag of rice is R80 and the government has announced that a 5kg bag of rice cannot be sold for less than R100, then this government decision will create a price ceiling, so the equilibrium price will rise, the quantity demanded will fall and the quantity supplied will rise, so there will be a surplus of rice and the deadweight loss will be created.
Numbers and figures are an essential part of our world, necessary for almost everything we do every day. As important…
APPROVED BY CLIENTS
"assignmentexpert.com" is professional group of people in Math subjects! They did assignments in very high level of mathematical modelling in the best quality. Thanks a lot
Comments
Leave a comment