Suppose that, in a competitive market without government regulations, the equilibrium price of soft tacos is $4 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 o nonbinding.

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Chapter1: Making Economics Decisions
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1. The language of price controls
Suppose that, in a competitive market without government regulations, the equilibrium price of soft tacos is $4 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.
Statement
The government prohibits tacquerias from selling soft tacos for more than $2 each.
Due to new regulations, tacquerias that would like to pay better wages in order to hire
more workers are prohibited from doing so.
The government has instituted a legal minimum price of $7 each for soft tacos.
Price Control
Price ceiling ▼
Price ceiling
Price floor
Binding or Not
Binding
Binding
Non-binding ▼
Transcribed Image Text:1. The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of soft tacos is $4 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. Statement The government prohibits tacquerias from selling soft tacos for more than $2 each. Due to new regulations, tacquerias that would like to pay better wages in order to hire more workers are prohibited from doing so. The government has instituted a legal minimum price of $7 each for soft tacos. Price Control Price ceiling ▼ Price ceiling Price floor Binding or Not Binding Binding Non-binding ▼
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