Define supply curve for a good is totally inelastic, Financial Management

Assignment Help:

Suppose the supply curve for a good is totally inelastic.  If the government imposed a price ceiling below the market-clearing level, would a deadweight loss result?  Explain.

While the supply curve is totally inelastic, the imposition of an effective price ceiling transfers all loss in manufacturer surplus to consumers.  Consumer surplus rises by the variation among the market-clearing price and the price ceiling times the market-clearing quantity.  Consumers capture all reduces in total revenue.  Hence, no deadweight loss occurs.


Related Discussions:- Define supply curve for a good is totally inelastic

Pledged-account mortgages (pams), PAMs are so structured that the rep...

PAMs are so structured that the repayments resemble traditional mortgages from the lenders' point of view and resemble GPMs from the borrowers' point of view. Thi

Calculate the net present value and payback period, Sarkozy Ltd is consider...

Sarkozy Ltd is considering the selection of one of a pair of mutually exclusive investment projects. Both would involve purchase of machinery with a life of five years. Projec

Calculate the new interest rate and excel function pv, Continuing growth of...

Continuing growth of the company has required that we issue the company''s corporate debt soon. As you know, in 6 months we plan to issue $10 million worth of 20-year corporate bon

Define the term- cash purchases, Define the term- Cash purchases     Shar...

Define the term- Cash purchases     Shareholders of the target company are bought out completely and have no further stake in business. This is good if predator shareholders want

Management information system, Explain the challenges before an E-business ...

Explain the challenges before an E-business management

Explain the concept of the world beta of a security, Explain the concept of...

Explain the concept of the world beta of a security. Answer:  The world beta calculates the sensitivity of returns to a security to returns to the world market portfolio. It is

Coverage ratio, Coverage ratios give the relationship between the financial...

Coverage ratios give the relationship between the financial charges of a firm and its ability to service them. The four most commonly used coverage ratios are:

Explain opportunity costs affect the capital budgeting, How do opportunity ...

How do opportunity costs affect the capital budgeting decision-making process? Opportunity costs imitate the foregone benefits of the alternative not chosen while a capital budge

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd