ons Supply and Demand of Cigars ns Refer to the above graph

ons Supply and Demand of Cigars ns Refer to the above graph. If the government imposes a price floor of $35, the quantity demanded will be cigars. (Remember that quantity is in thousands of units Your therefore. should be the nearest thousands of units. For Also, do not use coimas or decimal points) example 1000 2000. 3000 etc xample: 1000, 2000. 3000, etc e 3 Saved

Solution

Price floor is the lowest legal price a good can be sold at.It is used y the government to prevent prices from being too low.The price floor is set at above equilibrium level for it to be effective.

In this problem,the market is at equilibrium when price is equal to $25 at which 5000 cigars are demanded.

When the government sets the price at $35,the demand will fall as the price is raised and the consumers will not be willing to buy as much as before.The consumers demand will be equal to the point where the price floor intersects the demand curve.

So,the quantity demanded is equal to 1000 cigars.