2. price controls in the michigan blueberry market\nthe following graph shows the annual market for michigan…

2. price controls in the michigan blueberry market\nthe following graph shows the annual market for michigan blueberries, which are sold in units of 50 - pound boxes.\nuse the graph input tool to help you answer the following questions. you will not be graded on any changes you make to this graph.\nnote: once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.\nin this market, the equilibrium price is $25 per box, and the equilibrium quantity of blueberries is 150 million boxes.\nfor each of the prices listed in the following table, determine the quantity of blueberries demanded, the quantity of blueberries supplied, and the direction of pressure exerted on prices in the absence of any price controls.\nprice (dollars per box) quantity demanded (millions of boxes) quantity supplied (millions of boxes) pressure on prices\n15 210 30\n35\ntrue or false: a price ceiling below $25 per box is not a binding price ceiling in this market.\nbecause it takes six to eight years before newly - planted blueberry plants reach full production, the supply curve in the short run is almost vertical. in the long run, farmers can decide whether to plant blueberries on their land, to plant something else, or to sell their land altogether. therefore, the long - run supply of blueberries is much more price sensitive than the short - run supply of blueberries.\nassuming that the long - run demand for blueberries is the same as the short - run demand, you would expect a binding price ceiling to result in a

2. price controls in the michigan blueberry market\nthe following graph shows the annual market for michigan blueberries, which are sold in units of 50 - pound boxes.\nuse the graph input tool to help you answer the following questions. you will not be graded on any changes you make to this graph.\nnote: once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.\nin this market, the equilibrium price is $25 per box, and the equilibrium quantity of blueberries is 150 million boxes.\nfor each of the prices listed in the following table, determine the quantity of blueberries demanded, the quantity of blueberries supplied, and the direction of pressure exerted on prices in the absence of any price controls.\nprice (dollars per box) quantity demanded (millions of boxes) quantity supplied (millions of boxes) pressure on prices\n15 210 30\n35\ntrue or false: a price ceiling below $25 per box is not a binding price ceiling in this market.\nbecause it takes six to eight years before newly - planted blueberry plants reach full production, the supply curve in the short run is almost vertical. in the long run, farmers can decide whether to plant blueberries on their land, to plant something else, or to sell their land altogether. therefore, the long - run supply of blueberries is much more price sensitive than the short - run supply of blueberries.\nassuming that the long - run demand for blueberries is the same as the short - run demand, you would expect a binding price ceiling to result in a

Answer

Explanation:

Step1: Analyze demand - quantity at price $35

On the demand - curve, as price increases, quantity demanded decreases. Since the demand curve is downward - sloping and at price $15, quantity demanded is 210 million boxes, at a higher price of $35, quantity demanded will be less than 150 million boxes. By looking at the linear nature of the demand curve (assuming linearity for simplicity), we can estimate that quantity demanded at $35 is 90 million boxes.

Step2: Analyze supply - quantity at price $35

On the supply - curve, as price increases, quantity supplied increases. Since at price $15, quantity supplied is 30 million boxes and at equilibrium price $25, quantity supplied is 150 million boxes, at a price of $35, quantity supplied will be more than 150 million boxes. By looking at the linear nature of the supply curve (assuming linearity for simplicity), we can estimate that quantity supplied at $35 is 270 million boxes.

Step3: Determine pressure on prices at $35

When quantity supplied (270 million boxes) is greater than quantity demanded (90 million boxes) at a price of $35, there is a surplus. In the absence of price controls, the surplus will put downward pressure on prices.

Step4: Analyze price - ceiling statement

A binding price ceiling is a maximum price set below the equilibrium price. The equilibrium price is $25 per box. A price ceiling below $25 will prevent the market from reaching equilibrium, so a price ceiling below $25 is a binding price ceiling. So the statement “A price ceiling below $25 per box is not a binding price ceiling in this market” is False.

Answer:

Price (Dollars per box) Quantity Demanded (Millions of boxes) Quantity Supplied (Millions of boxes) Pressure on Prices
15 210 30 Upward
35 90 270 Downward
False