Question

A deadly hurricane caused substantial damage to corn produced in the eastern region of a small​ country, which is its main​ corn-producing belt. This resulted in acute shortage of corn in this country and the price increased. The government decided to introduce a price ceiling for corn in an attempt to prevent an abnormal price hike.​ Kyra, a student of​ economics, believed that this was not a good idea as it was likely to increase the shortage and create a huge deadweight loss. Her​ friend, Dona, however felt that the resultant deadweight loss may not be too high.

Answer 1

Recent easing of immigration laws has resulted in more and more people migrating to this country.

Step-by-step explanation:

In the context, the production of corn was suffered due to a hurricane attack. Thus there was a shortage of corns in the market and thus the is an increase in the price of corn due to the shortage. The government thus wanted to implement a price ceiling to control the price hike.

The supply curve will shift upwards as there is a decrease in the production of corn. As a result of this, there is an increase in final equilibrium price and hence the final equilibrium quantity will decrease.

The price ceiling which is below the equilibrium price will stop the cost of the corn from rising as the new equilibrium price cannot be charged due to the price ceiling.

As the price ceiling is implemented, there is a shortage of the corn. And as a result, a dead weight loss occurs. Hence the person who claims is supported by saying that due to the easing of laws related to immigration have affected the country as more and more people from other nation stared immigrating to this country.