Non-attendance of a price floor

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Reference no: EM136873

Q1. In the absence of a price floor, the maximum price that a few of the consumers are willing to pay is $0.20 for a pound of cheese whereas the market equilibrium price is $0.13/ pound. The graph also shows that the minimum price at which a few of the producers are willing to sell is $0.06 / pound. In nonattendance of a price floor, how much consumer surplus is created?

Q2. In 2000 US Presidential challenge, Al Gore was recommended by his strategists to wait for George W. Bush to announce his vice-presidential running mate ahead of making his own decision on a running mate. Under what situation would Gore be better off giving Bush a head start on putting mutually his presidential ticket? What type of strategic situation is this?

Reference no: EM136873

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