Exhibit 4-10 Supply and demand data for apricots $$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Bushels demanded } \
\text { per month }
\end{array} & \begin{array} { c }
\text { Price per } \
\text { bushel }
\end{array} & \begin{array} { c }
\text { Bushels supplied } \
\text { per month }
\end{array} \
\hline 50 & \$ 5 & 80 \
55 & 4 & 75 \
60 & 3 & 70 \
65 & 2 & 65 \
70 & 1 & 55 \
\hline
\end{array}$$ In Exhibit 4-10, assume that the government initially sets a price floor of $4 for apricots, and then removes the $4 price floor. What effect will this price change have?

Question

Exhibit 4-10 Supply and demand data for apricots $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Bushels demanded } \
\text { per month }
\end{array} & \begin{array} { c } 
\text { Price per } \
\text { bushel }
\end{array} & \begin{array} { c } 
\text { Bushels supplied } \
\text { per month }
\end{array} \
\hline 50 & \$ 5 & 80 \
55 & 4 & 75 \
60 & 3 & 70 \
65 & 2 & 65 \
70 & 1 & 55 \
\hline
\end{array}$$ In Exhibit 4-10, assume that the government initially sets a price floor of $4 for apricots, and then removes the $4 price floor. What effect will this price change have?

Quizplus · Accepted Answer

Removing the price floor of $4 will allow the price to adjust to market equilibrium, where quantity supplied and demanded are equal. At a price floor of $4, the quantity supplied (75 bushels) is greater than the quantity demanded (55 bushels). Removing the floor allows the price to decrease, increasing quantity demanded and decreasing quantity supplied until they match, thus the quantity of apricots supplied will decline.

Exhibit 4-10 Supply and Demand Data for Apricots In Exhibit 4-10, Assume That the Government Initially Sets a |