Assignment 4 ECON 2302

(i) and (iii) only

A binding price floor (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

ceiling.

A legal maximum on the price at which a good can be sold is called a price

below the equilibrium price.

A price ceiling will be binding only if it is set

a legal minimum on the price at which a good can be sold. often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. a source of inefficiency in a market.

A price floor is

quantity sold in the market will stay the same

If a nonbinding price ceiling is imposed on a market, then the

the equilibrium price is below the price ceiling

If a price ceiling is not binding, then

the equilibrium price is above the price floor

If a price floor is not binding, then

there will be no effect on the market price or quantity sold.

If a price floor is not binding, then

when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Price controls are usually enacted

the quantity of physicals demanded increases. there is shortage of physicals. the quantity of physicals supplied decreases

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

some buyers benefit, and some buyers are harmed

When a binding price ceiling is imposed on a market to benefit buyers

a smaller quantity of the good is bought and sold

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?