David sells Sno-cones and uses the money earned to buy pizzas. Last year Sno-cones sold for $1 each, andpizzas were $10 each. This year David finds that he can only charge $0.50 per Sno-cone, but that the priceof a pizza has climbed to $12.
a. If David asks the government to intervene to maintain his purchasing power, what price would the government have to set for Sno-cones? Explain.
b. How would the new, government-imposed Sno-cone price affect the Sno-cone market?

Question

David sells Sno-cones and uses the money earned to buy pizzas. Last year Sno-cones sold for $1 each, andpizzas were $10 each. This year David finds that he can only charge $0.50 per Sno-cone, but that the priceof a pizza has climbed to $12.
a. If David asks the government to intervene to maintain his purchasing power, what price would the government have to set for Sno-cones? Explain.
 b. How would the new, government-imposed Sno-cone price affect the Sno-cone market?

Quizplus · Accepted Answer

The Answer of David sells Sno-cones and uses the money earned to buy pizzas. Last year Sno-cones sold for $1 each, andpizzas were $10 each. This year David finds that he can only charge $0.50 per Sno-cone, but that the priceof a pizza has climbed to $12.
a. If David asks the government to intervene to maintain his purchasing power, what price would the government have to set for Sno-cones? Explain.
 b. How would the new, government-imposed Sno-cone price affect the Sno-cone market?

David Sells Sno-Cones and Uses the Money Earned to Buy