capital financial market? How can you tell? Now, imagine that because of a shift in the perceptions of

foreign investors, the supply curve shifts so that there will be $10 million less supplied at every interest

rate. Calculate the new equilibrium interest rate and quantity, and explain why the direction of the interest

rate shift makes intuitive sense.

Interest Rate Qs

Qd

5%

6%

7%

8%

9%

130 170

135 150

140 140

145 135

150 125

10%

155 110

TABLE 4.6

32. Imagine that to preserve the traditional way of life in small fishing villages, a government decides to

impose a price floor that will guarantee all fishermen a certain price for their catch.

a. Using the demand and supply framework, predict the effects on the price, quantity demanded, and

quantity supplied.

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

in the market?
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