Why do you suppose that the Venezuelan government has begun to provide individuals with coupons giving them the right to purchase only strictly limited quantities of flour, milk, and toilet paper?
Quantity restrictions to ensure effective allocation.
Venezuelan government has begun to provide individuals with coupons giving them the right to purchase only strictly limited quantities of flour, milk, and toilet paper.
Quantity restrictions are imposed to control the reckless use of resources which leads to wastage. To ensure efficient allocation in terms of restrictions such that all, roughly get the resources that they need, such quantitative restrictions are imposed. Else, there would be irrational use of scarce resources which would lead to wastage.
In recent years, technological improvements have greatly reduced the costs of producing basic cell phones, and a number of new firms have entered the cell phone industry. At the same time, prices of substitutes for cell phones, such as smartphones and some tablet devices, have declined considerably. Construct a supply and demand diagram of the market for cell phones. Illustrate the impacts of these developments, and evaluate the effects on the market price and equilibrium quantity.
There are simultaneous changes in the demand for and supply of global-positioning system (GPS) devices, with the consequences being an unambiguous increase in the market clearing price of these devices but no change in the equilibrium quantity. What changes in the demand for and supply of GPS devices could have generated these outcomes? Explain.
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