2. The language of price controls Consider the market for milk. Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $2.50 per gallon, and employees at grocery stores eam $21.50 per hour. Complete the following table by indicating whecher each of the statements is an example of a price ceiling or a price floor and whecher it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement The government prohibits grocery stores from selling milk for more than $2.30 per Price Control Effect gallon. There are many teenagers who would like to work at grocery stores, but the minimum- wage law sets the hourly wage at $25.00. The government has instituted a legal minimum price of $2.30 per gallon for milk.

2. The language of price controls Consider the market for milk. Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $2.50 per gallon, and employees at grocery stores eam $21.50 per hour. Complete the following table by indicating whecher each of the statements is an example of a price ceiling or a price floor and whecher it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement The government prohibits grocery stores from selling milk for more than $2.30 per Price Control Effect gallon. There are many teenagers who would like to work at grocery stores, but the minimum- wage law sets the hourly wage at $25.00. The government has instituted a legal minimum price of $2.30 per gallon for milk.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 56P: Table 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and...

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Similar questions

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Table 3.10 shows the supply and demand for movie tickets in a city. Graph demand and supply and identify the equilibrium. Then calculate in a table and graph the effect of the following changes. Three new nightclubs open. They offer decent bands and have no cover charge, but make their money by selling food and drink. As a result, demand for movie tickets falls by six units at every price. The city eliminates a tax that it placed on all local entertainment businesses. The result is that the quantity supplied of movies at any given price increases by 10%.
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A low-income county decides to set a price ceiling on bread so it can make sure that bread is affordable to the poor. Table 3.11 provides the conditions of demand and supply. What are the equilibrium price and equilibrium quantity before the price ceiling? What will the excess demand or the shortage (that is, quantity demanded minus quantity supplied) be if the price ceiling is set at 2.40? At 2.00? At 3.50?