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Q5: The supply, demand and equilibrium price and quantity for Good A are depicted on the diagram below. Suppose that there is a drop in the price of Good B, shifting the demand curve for Good A in a certain direction. Scenario #1: The two goods are substitutes. m - Draw on the diagram the new demand curve 51 for Good A, and label it as D2. - Denote the new equilibrium price and qua ntity, respectively, as P2 (on the price axis) and (12 [on the quantity axis). P1 - Draw an up-arrow ('I') or a down-arrow (4,) between P1 and P2 to indicate the direction of price change. - Draw a right-arrow (-)) or left-arrow ((-) between [11 and 02 to indicate the direction 01 of quantity change. 0 Scenarlo #2: The two goods are complements. Plies - Draw on the diagram the new demand curve for Good A, and label it as D2. 51 - Denote the new equilibrium price and quantity, respectively, as P2 (on the price axis) and 02 (on the quantityr axis). - Draw an up-arrow ('l') or a down-arrow ('1') ,1 between P1 and P2 to indicate the direction of price change. - Draw a right-arrow (-)) or left-a rrow ((-l between (11 and [12 to indicate the direction of quantity change. m 91 Quantity Q6: The questions below have to do with concepts related to Price Ceiling. A government price ceiling of SC per unit stipulates that: (A) the market price can be anything but below 5C per unit. (B) the market price can be anything but above SC per unit. Answer: Consider the market depicted by the supply and demand diagram below. The current equilibrium is Point A where the price is $3 and the quantity is 1,000 units. Scenario 1: Suppose the government is to impose a price ceiling of 54, then there will be (A) surplus. (B) shortage. (C) neither surplus nor shortage. Answer: Scenario 2: Suppose the government is to impose a price ceiling of 52, then there will be (A) surplus. (B) shortage. (C) neither surplus nor shortage. Answer: Reflection: A price ceiling is binding only if the ceiling is set the equilibrium price. (Choose between "above\" and \"below") Answer: Q1: The questions below have to do with concepts related to Price Floor: A government price floor of $F per unit stipulates that: (A) the market price can be anything but below $F per unit. (B) the market price can be anything but above $F per unit. Answer: Consider the market depicted by the supply and demand diagram Price below. The current equilibrium is Point A where the price is $3 and the quantity is 1,000 units. Scenario 1: Suppose the government is to impose a price floor of $4 $4, then there will be Price Floor $3 (A) Surplus. (B) shortage. (C) neither surplus nor shortage Answer: 1,000 Quantity Scenario 2: Suppose the government is to impose a price floor of Price $2, then there will be (A) surplus. (B) shortage. (C) neither surplus nor shortage. Answer: $3 Reflection: A price floor is binding only if the floor is set $2 Price Floor the equilibrium price. (Choose between "above" and "below".) 1,000 Quantity