a. Using the demand and supply framework, predict the effects of this price floor on the price, quantity

demanded, and quantity supplied.

b. With the enactment of this price floor for natural gas, what are some of the likely unintended

consequences in the market?

c. Suggest some policies other than the price floor that the government can pursue if it wishes to

encourage drilling for natural gas and for a new pipeline in Alaska.

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Problems

28. Identify each of the following as involving either demand or supply. Draw a circular flow diagram and label

the flows A through F. (Some choices can be on both sides of the goods market.)

4 • Problems 109

a. Households in the labor market

b. Firms in the goods market

c. Firms in the financial market

d. Households in the goods market

e. Firms in the labor market

f. Households in the financial market
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