Consider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect The government prohibits fast food restaurants from selling hamburgers for more than $5 each. Price ceiling or price floor Shortage, surplus, or no effect Due to new regulations, fast food restaurants that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour. Price ceiling or price floor Shortage, surplus, or no effect The government has instituted a legal minimum price of $5 each for hamburgers. Price ceiling or floor price Shortage, surplus, or no effect
Consider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect The government prohibits fast food restaurants from selling hamburgers for more than $5 each. Price ceiling or price floor Shortage, surplus, or no effect Due to new regulations, fast food restaurants that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour. Price ceiling or price floor Shortage, surplus, or no effect The government has instituted a legal minimum price of $5 each for hamburgers. Price ceiling or floor price Shortage, surplus, or no effect
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour.
Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market.
|
Statement
|
Price Control
|
Effect
|
|---|---|---|
| The government prohibits fast food restaurants from selling hamburgers for more than $5 each. | Price ceiling or price floor |
Shortage, surplus, or no effect |
| Due to new regulations, fast food restaurants that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour. | Price ceiling or price floor | Shortage, surplus, or no effect |
| The government has instituted a legal minimum price of $5 each for hamburgers. | Price ceiling or floor price | Shortage, surplus, or no effect |
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