Question: a) Explain what will happen in the market if the government imposed a price floor of $120. Represent this situation using a Demand-Supply graph (carefully

a) Explain what will happen in the market if the government imposed a price floor of $120. Represent this situation using a Demand-Supply graph (carefully label each axis, curve, and the equilibrium point). Illustrate the excess of demand or excess of supply.

b) Suppose that the government now reduces the price floor to $80. Show and explain the effect on the market in the graph. Illustrate the excess of demand or excess of supply.

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