The government of B.C. recently put a legal limit on food delivery charges. According to the new law, delivery fees/charges can't be higher than 20% of the dollar value of the food order. Before the law was passed, the delivery charges were as high as 30% of the dollar value of the food order.

Suppose the market for typical delivery services in a city is in equilibrium with the equilibrium fee/charge of 25%.

(i) According to the demand and supply model, what happens in the market for delivery services when there is a ceiling/cap placed at 20%? Explain with the help of an appropriate diagram. [ Hint: the price (P) is delivery fees in percentages and the quantity is the number of deliveries (Q).J (4 points)

(ii) What are the main economic arguments against imposing a limit on delivery charges? Explain clearly.

[Hint: think of the ways in which some people and businesses may be negatively impacted by the law.]

4 points)