(Solved):       It is claimed that price floors and price ceilings both reduce the actua ...

 

 

 

It is claimed that price floors and price ceilings both reduce the actual quantity exchanged in a market. Use a diagran diagrams to support this conclusion, and explain the common sense behind it. Last October, the highest-paying passenger on United Flight 815 from Chicago to Los Angeles paid \$1,248.51. The lowest-paying passenger on the same flight paid \$87.21. Can we say anything about the likely elasticities of demand of the two customers? Use the concepts of marginal analysis and opportunity cost to explain why it might make sense for United Airlines to charge some lucky soul so little. Why are college textbooks so expensive when other books that cost the same to produce have a lower price?