ECON 1000 Lecture Notes - Avoidance Speech, Price Floor, Economic Surplus
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7 Nov 2011
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Related Questions
1. The language of price controls
Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon.
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 | Price Control | Binding or Not |
---|---|---|
Due to new regulations, gas stations that would like to pay better wages in order to hire more workers are prohibited from doing so. | price ceiling/price floor | binding/non |
The government has instituted a legal minimum price of $2.70 per gallon for gasoline.price ceiling/price floor | ||
The government prohibits gas stations from selling gasoline for more than $3.40 per gallon.price ceiling/price floor |