Module 8 Supply and Demand: Price Controls (Ceilings and Floors)
On game days homeowners near Middletwon Universtiy stadium used to rent parking spaces in their driveways to fans at a going rate of 11$. A new town oridinace now sets a maxium parking fee of $7. Use the accompanyig supply and demand diagram to explain how use each of the following can result from price celling. A someone on homeowners now think that it's not worth the hassle to rent out spaces why is this result of a price ceiling?
If they get less then there is less of an incentive to make things
The state legisluature mandates a price floor for gaslonie of Pf per gallon, Asses the following statments answer usign the figure provided b. Proponents claim consumers will be better off because gas stations will provide better service. Opponents claim consumers will be generally worse off because they would prefer to buy gas at cheaper prices
It makes producers better off, but hurts consumers because it's more expensive
On game days homeowners near Middletwon Universtiy stadium used to rent parking spaces in their driveways to fans at a going rate of 11$. A new town oridinace now sets a maxium parking fee of $7. Use the accompanyig supply and demand diagram to explain how use each of the following can result from price celling. b. Some fans who used to carpool for the game now drive alone
Because it was cheaper, to park, some fans didn't feel the need to carpool anymore because of lower price
On game days homeowners near Middletwon Universtiy stadium used to rent parking spaces in their driveways to fans at a going rate of 11$. A new town oridinace now sets a maxium parking fee of $7. Use the accompanyig supply and demand diagram to explain how use each of the following can result from price celling. c. Some fans can't find parking and leave without seeing the game
Because the prices are cheaper, there is more demand and people have less access to parking because the demand is so high.
black market
a market in which goods or services are bought and sold illegaly--either because it is illegal to sell them at all or because the prices charged are legally prohibeted by a price celling.
a price celing
a maximum price sellers are allowed to charge for a good or service. Price cellings typically lead to ineeficiency in thef orm of wasted resources: people expend money, effort and time to cope with the shortages caused by the price celling.
Refer to the wrath provided. A price floor set up five dollars will result in a. A shortage of hundred units b. A surplus of 100 units c. A shortage of 200 units d a surplus of 200 units e a surplus of 50 units
b. Supply is 200 demand is 100, there is $100 difference
Refer to the graph provided if the government establishes a minimum wage of $10, how many workers will benefit from this higher wage? a. 30 b. 50 c. 60 d. 80 e. 110
b. This surplus, 110-150, difference between 50 and 110
On game days homeowners near Middletwon Universtiy stadium used to rent parking spaces in their driveways to fans at a going rate of 11$. A new town oridinace now sets a maxium parking fee of $7. Use the accompanyig supply and demand diagram to explain how use each of the following can result from price celling. f. Some homeowners rent spaces for more than seven dollars the pretend the buyers are nonpaying friends or family
black market, higher cost better quality of
Refer to the graph for question four: with a minimum wage of $10 , how many workers are unemployed (like to work, but are unable to find a job) a. 30 b. 50 c. 60 d. 80 e. 110
c. If 50 is demanded, and there are hundred 10 willing to work, the difference between 110 and 50 is 60
Effective price ceilings are inefficient because they a. Create shortages b. lead to unsued resources c. Decrease quality d. Create illegal markets e. Do all of the above
e.
To be effective, a price ceiling must be set I. Above the equilibrium price II. in the housing market III. to achieve the equilibrium market quantity a. I b. II c. III d. I, II, and III e. none of the above
e. Why dry sealing above the equilibrium price is wrong is because the price ceiling is always below because on price at the equilibrium is too high
True or false? Explain your answer. Price ceiling below the equilibrium price in an otherwise efficient market does the following a. increases the quantity supplied,
false bec not as much money/ incentives to buy it, less good prod
price ceilings often lead too
inefficient allocation to consumers: people who want the good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are only willing to pay a low price to get it.
price floor
minum price buyers are requried to pay for a good or service
Why there are price ceilings
persistent shortage of good, innefficency arising from this perstistent shortage in the form of inefficienctly low quantity, inefficent allocation of the good to consumers, resourecs wasted in searching for the good, and inefficently low qulality of the good offered for sale, the emergence of illegal black market activity, although they have ceertain affects, they do benefit some people in that they give a small minority of renters much cheaper housing tan they would get in an unregulated market. The people who benefit are better organized and more vocal than the ones who are harmed by them, ins ome instances.
inefficiency low quality
sellers offer low-quality goods at a low price even though buyers would rather have a higher quality and are willing to pay a higher price for it. Price cellings often lead to ineffciently low quality
price floors
sometimes governments intervene to push market prices up instead of down. These have been widley legislated for agricultural products: ie, wheat and milk, an example of this is minum wadege,
True or false? Explain your answer. Price ceiling below the equilibrium price in an otherwise efficient market does the following b. makes some people who want to consume the good worse off
true bec lower quantity/ less of it
True or false? Explain your answer. Price ceiling below the equilibrium price in an otherwise efficient market does the following c. makes all producers worse off
true bec they rn't getting @s much money @s they belive they need to suit themsleves, and their inputs in order to prod outputs
the form of wasted resources
price cellings ypically lead to this: people expend money effort and time to cope with the shortages caused by the price celling.
inneficeint allocation
price floors lead to this, those who would be willing to sell the good at the lowest price arent' always those who manage to sell it
inneficently high quality
price floors often lead to ineffiency in that goods of ineeficently high quality are offered: sellers offer high-quality goods at a high price, even though buyers would prefer a lower quality at a lower price
why are there price floors
-Governments use price floors to keep certain prices from going too low. Two common price floors are minimum wage laws and supply management in Canadian agriculture. Other price floors include regulated US airfares prior to 1978 and minimum price per-drink laws for alcohol.
On game days homeowners near Middletwon Universtiy stadium used to rent parking spaces in their driveways to fans at a going rate of 11$. A new town oridinace now sets a maxium parking fee of $7. Use the accompanyig supply and demand diagram to explain how use each of the following can result from price celling. e. Friends of homeowners near the stadium regularly attend the games even if they aren't big fans, but some more serious fans have given up because of the parking situation
Shortage caused by good cheapness. For the serious fans, but for the people who have friends was operate it they can go with them for free
The state legisluature mandates a price floor for gaslonie of Pf per gallon, Asses the following statments answer usign the figure provided a. Proponents of the law claim it will increase the income of gas station owners opponents claim it will hurt gas station owners because they will lose customers
Some owners lose money because there will be a fall, some gases station serve those below are money, but some not at all
The state legisluature mandates a price floor for gaslonie of Pf per gallon, Asses the following statments answer usign the figure provided c. Proponents claim they are helping gas station owners without hurting anyone else. Opponents claim that consumers offer will end up doing things like buying gas in nearby state or on the black market
The proponents hurt consumers because it is too expensive, and they might go to the black market because it is cheaper.
Price control
When a government intervens to regulate prices, we say that it imposes price controls. These conrtols typically take the form of either an upper limit, a price ceiling, or a lower limit, price floor.
