The people live well on the island of Lalaland. They are especially proud of their flourishing culture of making the most beautiful music with their special Lalaland flutes, made out of bamboo flowering plants that grow nicely on the island. However, this one summer some nasty bugs were destroying lots of the bamboo plants. This led to a shortage of bamboo to make the flutes (because only the best, special bamboo plants can be used for the Lalaland flutes). The flute makers had problems to build enough flutes for the island musicians. As a consequence, the prices for the flutes increased. Usually, the normal price (-equilibrium price) for flutes on the market was 12 island dinars and about 100 flutes were sold each month. Now the new normal price (=new equilibrium price) for flutes became 16 island dinars and only 50flutes were sold each month. The King of the island became scared: what will happen with the music events, when flutes are so expensive, that notenough islanders can play the flute? He invited his most loyal advisors to solve the problem. The first advisor, Mourad,was recommending to the king to help the musicians in making a new price law: to stop the price development for flutes,the island law now determines, that a flute cannot be more expensive than 17 island dinars. However, after passing the law nothing had changed. Flutes were still selling for 16 island dinars. Then his second advisor, Aysha, was recommending to adjust the law, so that flutes should be sold for a price lower than 12 island dinars. This law was now having some consequences. All flute prices were controlled, and no flute could be sold with a price of 12 island dinars or higher. The King was excited and was expecting that finally every flutist on the island was able to buy an affordable flute. However,things were not working out the way he and Aysha were hoping it.I nof 1) How did the supply and demand curves changed (including the equilibrium) when bamboo became rare and more expensive, and the price for flutes changed to 16 island dinars? (draw the old and new supply and demand curves,remember to write the name for the axes on it, think about what plans have changed: the buyer plans or the supplier plans?)(10 marks) 2) What form of a price control did the advisors try to install? (price ceiling or price floor?) (5 marks) 3) Why did the first price control by Mourad not work? (draw the price control into a supply and demand figure) (10 marks) 4) Explain what happened when Aysha was suggesting the different price control. How is this price control different from Mourad's price control? (draw a new supply and demand curve for this case). Explain what could have been going wrong now? 5) Do you have any advice for the King how the music culture can be saved? (have a short suggestion)(

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The people live well on the island of Lalaland. They are especially proud of their flourishing culture of making the most beautiful music with their special Lalaland flutes, made out of bamboo flowering plants that grow nicely on the island. However, this one summer some nasty bugs were destroying lots of the bamboo p