BAKIAO, FLORY VIC L.

BA2-F

Basic Microeconomics (BA120)

Tuesday and Thursday

7:00-8:30 PM

BA120 CASE STUDY NO.1

MIDTERM

October 28-29 2021

1. The equilibrium price of a product is 33.50 pesos, but when the

government set the price ceiling of 30.00 pesos the firms contested in the
court so that he cannot adjust the price according to the equilibrium
price. Does the firm can win the court battle?
NO
 Because, it is already mandated and imposed by the
government.
 Also, when the government set a price ceiling, it means to
protect consumers by ensuring that prices do not become
prohibitively expensive.
2. Ana is a buyer of an agricultural product in their province, one of her
business trip. She was able to buy 1,400,000 pesos worth of mangoes to
be delivered to Manila. The road going to the province is a part of her
land where she did not allowed that the farm to market road will be
constructed. How much the deadweight loss of Ana when she failed to
deliver her mangoes to Manila.
YES
 There is a possible that the buyer and seller can result in
financial losses and harm to one’s reputation due to the
deadweight loss worth of 1,400,000 pesos.
  However, if Ana choose to shipping mode through sea
transport of her mangoes due to the constructed roads in their
province, there will be possible that her mangoes will delivered
and will be no deadweight loss.
3. Jose is an exporter of leather bags to Paris the tax imposed each bag as
customs duties are 15% of the price of the bags which cost 785. How
much is the total of each bag.
YES
 Definitely, Jose will change the price from original price with
785 to newly price worth of 902.75 due to the taxes that paid
for exporting his product.
 Consequently, Jose exporting product have more benefits
includes to improve profitability, improve cash flow and more
customers.
4. The government imposed price floors on the basic commodities at 10%
lower than equilibrium price. Thus, government wanted to firm to shut
down.
NO
 It may be the government imposed price floors to prevent a
price falling below a certain level.
 In fact, price floor below the equilibrium will not be binding
and will have no effect.
5. Upon the imposition of price floors what do you think is the decision of
the firms regarding their level of production, and why?
YES
 I think the firm will be decided to conduct some strategies to
help reimburse the cost of their certain business.
 Aside from that to imposed downsizing in order to help the
firm efficiency.