1. Due to the current lockdown situation, the price of mango has decreased dramatically

in Rajshahi. Draw an initial equilibrium situation for the mango market. Then

graphically show and explain how the nationwide lockdown has caused decrease in

mango price (hint: show the transmission mechanism for both demand and supply

situation).

2. Eid-ul-Adha is right around the corner. Every year Eid largely affects the commodity

market. Suppose, Government has imposed a maximum selling price of per kg onion

at 50 taka, whereas, the market price was 70 taka per kg before the announcement.

a. Explain the effects of this ceiling price on the demand and supply of the onion

market. In your graph, show the effects of the price changes on quantity

demanded and quantity supplied. Does it create excess supply or excess

demand? What will happen to the market price?

b. In the above situation, who (buyers or sellers) is going to get the benefit from

such policy? Explain it (clue: use a graph where a Price

Ceiling is binding).

Describe widely