SAMANTA FAYE M.

BRUCE BASIC MICROECONOMICS

BSBA FM1 (Group 2) MRS. SUSAN REYES

Analysis: Analyze the following situation and answer the questions.

SITUATION A - Pork is sold at Php150 per kilo. Producers can supply 100 kilos a day
and consumers buy 100 kilos per day.
SITUATION B - Super Typhoon struck the northern part of the country, the government
declared the area under state of calamity and interfered with the pricing of commodities.
This time, pork is sold at Php120 per kilo. Consumers tend to buy 150 kilos because of
the price decrease, but the producers decreased their supply to 75 kilos.
SITUATION C - After the calamity, the price of pork increases as part of the government
support to the hog raisers. The price of pork is pegged at Php180 per kilo. The
producers can supply 150 kilos, but this time consumers decreased their consumption
to 75 kilos,

Questions:

1. Draw a graph showing situations A, B, and C.

SITUATION A SITUATION B SITUATION C

2. How much is the equilibrium price?

- The equilibrium price amounts to Php 150

3.In what situation did the government implement price ceiling? How much is the
ceiling price?
- The government implemented a price ceiling in situation C. The ceiling price
amounts to Php180.

4. What is the result when price ceiling is in effect?

- As a result of the price ceiling, the producers increased the price and supply of
pork, but the demand for it dropped or decreased.

5. What is the role of the government if there is lack of supply in the market?
- The government imposes price controls in order to ease the effects of shortages
on both consumers and producers.
6. How many kilos of pork should be added so that the implementation of price
ceiling will be effective?
- The implementation of price ceiling will only be effective when 75 kilos of pork
are added to the market

7. What did the government implement in situation C with regard to pricing?

- The government implemented a price ceiling in order to keep prices affordable
for the consumers

8. Why did the consumers decrease their demand?

- The consumers decreased their demand because the price of pork increased.

9. What is the result when the price support is implemented?

- The implementation of the price support changed the amount of supply and
demand for pork.

10. The market is in excess of how many kilos of pork?

- The market has an excess amount of pork equivalent to 75 kilos

11. What is the role of the government in the implementation of price support?
- The government is responsible for imposing price controls in order to assist both
the consumer and the producer

12. How much is the floor price?

- The floor price amounts to Php120.

13. Based on the graph, what do you call the price which is higher than the
equilibrium price?
- The price higher than the equilibrium price is called ceiling price

14.The price lower than the equilibrium price is called?

- The price lower than the equilibrium price is called floor price

15. What is the point where the demand and the supply curve meet?
- The point where the demand and supply curve meet is called market
equilibrium