Question
Assume the market for chicken wings is in equilibrium. (a) Draw a correctly labelled graph of the chicken wing market, labelling the price Pe and
Assume the market for chicken wings is in equilibrium. (a) Draw a correctly labelled graph of the chicken wing market, labelling the price Pe and the quantity Qe at equilibrium. (b) Assume the government now decides the price of chicken wings is too high and decides to set an effective price ceiling in the market. Draw the price ceiling on the same graph drawn in (a), labelling the new price Pc, the new quantity supplied Qs, and the new quantity demanded Qd. (c) At the new price, is the chicken wing market in equilibrium, or does it have a shortage or a surplus? Explain and shade this area on your graph.
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