Reading the links, address the following questions in an essay or short answer form:
1. In some cases, the government can intervene in the market when the equilibrium price is too high or low. For example, a price ceiling is a legal maximum price that can be charged in a particular market. Do some research on your own.
a) Is a price ceiling set above or below the market price?
b) Give an example of a price ceiling and discuss some disadvantages and advantages of this type of government intervention.
2. An art museum raises its admission price, and ends up with a decrease in its total revenue. How could you explain this situation to the museum director?
3. Suppose Billy drinks two cups of coffee a day no matter what the price. What type of elasticity does coffee have?
4. What are the main determinants of elasticity of demand? Which is likely to be more elastic—the demand for orange juice or the demand for a particular brand of orange juice?
Use concepts from the links readings as well as any good quality resources you can find. Be sure to cite all sources within the text and provide a reference list at the end of the paper.
Length: 4–5 pages double-spaced and typed.