Question: Suppose instead the titanium market in Problem 2 with no
Suppose instead the titanium market in Problem 2, with no tax but a price floor at $4/oz, suffers a reduction in supply because of dwindling titanium reserves. The new supply curve is P = 2 + Q. How does excess supply change due to the reduction in supply? Is the price floor still binding (does it cause price to rise from its equilibrium level)?
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