Brief situation and question:
 Assume in a simple economic example that a binding/effective price floor is implemented and
already in place, in a given market for some good, called “Good X”.
 Next, an economic change occurs in the market. The economic change that occurs is an increase
in income for people who buy (a normal good) “Good X”.
 Assume that this is a competitive market, what will happen to the market selling price and the
market quantity that is bought and sold in the market for “Good X”?
 Finally, please cite an example from the news of a current event in real life that relates to the
economic change occurring (i.e. an increase in the number of consumers) affecting “Good X”
above, and be sure to explain why it relates.
Use supply and demand analysis to demonstrate your answer and be sure to provide the rationale
behind what is happening and also discuss any interesting observations or outcomes. Note that the
magnitudes of any supply and/or demand shifts in this example are not specified, so you may want to
consider all possible scenarios.