【正文】 Think of some examples where the price of a good or service is kept below the equilibrium (. rent controls). In each case consider the advantages and disadvantages of the policy. Two examples are:167。 The higher taxes that must be paid to fund the benefits may act as a disincentive to taxpayers generally to work so much. This will reduce the level of the country’s production and ine.These issues are examined in section . 216。 supply shifts to the left as producers hold back stocks until the price does rise). (f) Price rises, quantity falls (supply shifts to the left).(g) Price rises, quantity rises or falls depending on the relative size of the shifts in demand and supply (demand shifts to the right as more healthconscious people start buying butter。 What would happen to price and quantity if the demand curve shifted to the left? Draw a diagram to illustrate your answer. Both price and quantity will fall. Imagine in Figure that the original curve were D2 and that it shifted to D1. Price would fall from Pe2 to Pe1 and quantity would fall from Qe2 to Qe1. 45 216。s, what would happen to the value of the d term if P were now measured in pence? It would now have a value of 10.Page 42 216。 The price of beef rises.167。 The profitability of alternative crops (. carrots) rises.167。 (Looking at the Maths) 2. Now use this schedule to plot a demand curve with respect to ine. Comment on its shape. The curve will be an upwardsloping straight line, crossing the horizontal axis at –50 000. It would rise by 100downward sloping。 2. Assuming that demand does not change from month to month, plot the annual market demand for potatoes. The amount demanded would be 12 times higher at each price. If the scale of the horizontal axis were unaltered, the curve would shift way out to the right. A simple way of showing the new curve, therefore, would be to press the scale of the horizontal axis. (If each of the numbers on the axis were multiplied by 12, the curve would remain in physically the same position.) 216。 1. Draw Kate’s and Simon’s demand curves for potatoes on one diagram. Note that you will use the same vertical scale as in Figure , but you will need a quite different horizontal scale. This is shown in Diagram .Page 33 216。 (b)000 units for each 163。 A poor potato harvest.167。 A longrunning industrial dispute involving leather workers is resolved.167。 (Looking at the Maths) 2. Draw the schedule (table) and graph for equation (8) for prices from 163。 What will happen to the equilibrium price and quantity of butter in each of the following cases? You should state whether demand or supply (or both) have shifted and in which direction. (In each case assume ceteris paribus.) (a) A rise in the price of margarine。 supply shifts to the left as a result of the increased cost of production). 50 216。 (Threshold Concept 7) 2. Assume that the government sees litter as a market failure that requires government action. Give some examples of policies it could adopt to reduce litter.Having litter wardens who could fine people for dropping litter。 Rent controls. Advantages: makes