Question 2 (16 points) Answer the following questions based on the below figure. Price 1000 900 400 700 400 300 400 300 200 100 1000 2000 3000 4000 3000 6000 7000 BOOD quantity (For part A, B, C, and D, explain whether this is a binding or nonbinding constraint. Also if this is binding, explain whether it creates a surplus or shortage, and the amount of surplus/shortage). A.What happens if government imposes a price ceiling of 300? B.What happens if government imposes a price ceiling of 600? C.What happens if government imposes a price floor of 900? D.What happens if government imposes a price floor of 400? E.Suppose this is the labor market. Who are suppliers of labor in this market? Who demands labor in this market? D F.Suppose government imposes a price floor of 900. If there is an immigration (out of country) that reduces labor supply (for any given wage rate), what happens to shortage or surplus? Why? 1

(For part A, B, C, and D, explain whether this is a binding of nonbinding constraint. Also if this is binding. explain whether it creates a surplus of shortage, and the amount of surplus/shortage). A. What happens if goverament imposes a price ceiling of 300 ? B. What happens if goverment imposes a price ceiling of 600 ? C. What happens if goverment imposes a price floor of 900 ? D. What happens if government imposes a price floor of 400 ? E Suppose this is the labor market. Who are suppliers of labor in this market? Who demands labor in this marken? F Suppose goverament imposes a price floor of 900 . If there is an immigration (out of country) that reduces labor supply (for any given wage rato); what happens to thortage or surplos? Why