question1-3

Judge True, False or Uncertain, and give your explanation (words and Diagram is necessary , Write as many words as you can, the more detailed the better; brief descriptions are worthless) (i). Head Office is considering the placement of a 'price floor' for the sale of Cloud 9- branded yoghurt. The price floor will help consumers by maintaining a lower than equilibrium price. (ii).Garret spends his weekly budget of $300 on two goods - video games and restaurant dining. Video games cost $15 each and a meal at a restaurant costs $20 each. If Garrett wins a voucher for $50 to spend on restaurants in the area then this will shift his budget constraint out and increase his consumption of both video games and restaurant meals. (iii).If we assume that Cloud 9 is a perfectly competitive firm operating in a perfectly competitive market and initially at the long run equilibrium point of operations, increasing the wages of workers will lead to the firm shutting down in the short run and not producing in the long run