EC 201 Study Guide - Final Guide: Market Clearing, Price Ceiling, Price Floor
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Problem set #3 (due friday, feb 6 ) One element of the health care reform package is medical cost controls. Let"s consider cholesterol tests and assume that the market is approximately competitive. price supply quantity: find the market clearing price and quantity. __________________: suppose that a price ceiling of is imposed. Illustrate your answer with a diagram: suppose that a price floor of is imposed. Using the same data as problem 1, suppose that a tax on cholesterol tests is imposed. Assume that no price controls are in effect and that the suppliers are assigned the responsibility of paying the tax money to the government: find the price paid by consumers. ___________________: find the price (net of tax) received by suppliers. ____________________: draw a diagram illustrating your answer and show the deadweight burden, how will the outcome change if the demanders are assigned the responsibility of paying the tax money to the government, subsidy incidence.
