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situations of price floors and price ceilings

Discussion Point 1: Given a holiday weekend, what’s wrong with the statements that “gas stations really price gouge us before the weekend of holiday” or “Roses are red and also too expensive before Valentine’s Day.” What about the positive slope of the supply curve explains the higher price (and not just the greed of the seller)? Do not discuss the shifting to the right of the demand curve as an explanation (yes, that happens but it does not cause a positively slopped supply curve). It has to do with the availability of land, labor, capital and entrepreneurship when a business expands it output over a short period. Relate this to any ideas of or experience in a business you have had contact with (to receive credit, your posts must relate the topic to your personal situation thus everone’s answer will be different). What does business do to meet peak demand during a short period.

Discussion Point 2: Discuss situations of price floors and price ceilings (where do these happen). Add at least one example of a price ceiling or floor that doesn’t exist but you could justify (to receive credit, you must address this part of the question by mentioning a price ceiling or floor that you would like to see and explain the details).

Discussion Point 3: Paul says, “I don’t get the difference between a ‘change in quantity demanded’ and ‘a change in demand’. Poor Aul (if a dropped letter makes a difference what about a dropped word)! Explain the problem. Provide an original example (not one that a student has already mentioned) of the difference between a shift versus movement along.

Discussion Point 4: In “Transmission R Us: Combining the PPF with the Supply and Demand Curve (see PPF & S/D), a hypothetical situation which led to a increase in transmission work at a repair shop is llustrated. Explain (In a minimum of 50 words each), a. How the increase in price from $200 to $300 is justifed (use in your discussion the concept of Specialized resources, tangent lines, specialization) b. What is the side-effect of not allowing the price to rise to $300? Provide an original example (not one that a student has already mentioned) of where you have experienced a negative consequence of the market not working properly.

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