Consider the market for after school daycare where the demand is given by Q D = 1
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Question:
Consider the market for after school daycare where the demand is given byQD=1002P and the supply is given by QS=5 P .
(a) What is the equilibrium price and quantity in this market? Show it on a graph.
(b) Suppose the government is debating placing a price ceiling to help consumers. At what prices will the price ceiling have an effect on the market?
(c) Pick a price where the price ceiling is binding and calculate the shortage/surplus
caused by the policy.
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