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Show graphically why price ceilings entail shortages

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Reference no: EM13323860

Why is it desirable for ceiling prices to be accompanied by government rationing? And for price floors to be accompanied by programs that purchase surpluses, restrict output, or increase demand?

Show graphically why price ceilings entail shortages and price floors result in surpluses. What effect, if any, does elasticity of demand and supply have on the size of these shortages and surpluses? Explain.

Reference no: EM13323860

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