Answer to Question #149003 in Microeconomics for Jay

Question

Question 2 (24 marks)
Read the following article from the Financial Times by Andrew Edgecliffe-Johnson published in April 2020: https://www.ft.com/content/22430f34-cb50-4f43-80eb- e2a28b88078e (750 words maximum)
(a) Using economic reasoning, why are masks important? Explain. (3 marks)
(b) Using economic reasoning, why does the market fail to yield the efficient outcome in
the specific scenario given? Explain. (5 marks)
(c) Given the current situation outlined in the article, discuss the pros and cons of
imposing a price ceiling in the United States. (Be specific and link the pros and cons
to the given situation) (6 marks)
(d) Would the imposition of a price ceiling be an effective solution to the problem
outlined in the article? Carefully discuss. (3 marks)
(e) Propose an alternative method of solving the problem outlined in the article. Use
diagrams to support your discussion. (marks will be deducted for incorrect or incomplete labelling of graphs)

Answer 1

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