Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each. 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 is binding or nonbinding. Price Control Binding or Not Statement The government prohibits fast-food restaurants from selling hamburgers for more than $5 each. There are many teenagers who would like to work at fast-food restaurants, but they are not hired due to minimum-wage laws. The government has instituted a legal minimum price of $8 each for hamburgers.

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1. The language of price controls
Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each.
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 is binding or
nonbinding.
Price Control
Binding or Not
Statement
The government prohibits fast-food restaurants from selling hamburgers for more than $5
each.
There are many teenagers who would like to work at fast-food restaurants, but they are
not hired due to minimum-wage laws.
The government has instituted a legal minimum price of $8 each for hamburgers.
Transcribed Image Text:1. The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each. 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 is binding or nonbinding. Price Control Binding or Not Statement The government prohibits fast-food restaurants from selling hamburgers for more than $5 each. There are many teenagers who would like to work at fast-food restaurants, but they are not hired due to minimum-wage laws. The government has instituted a legal minimum price of $8 each for hamburgers.
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