... price floor at £10.00 the graph below shows the effects it would have. The equilibrium price is £6.00. The price floor is at £10.00, at this price the quantity demanded is 300 and the quantity supplied is 1900, leaving a surplus of 1600. Price ceiling A definition of price ceiling is when the price is artificially held below the equilibrium price and is not allowed to rise. The graph below shows the effects that a price ceiling of £5.00 would have. The price of the good is limited to be £5.00. At this price the quantity demanded is 1300 units and the quantity supplied is 900 units meaning there is a shortage of 40 units. Question one (c) I have been asked to calculate the Price Elasticity of Demand (PED), in order to calculate these an equation is needed, the equation looks like this. New Qd - Old Qd = X Old Qd New Px - Old Px = ...

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