In a market with a binding price control, it is _____ equilibrium for a price ceiling and _____ equilibrium for a price floor.
In a market with a binding price control, it is _____ equilibrium for a price ceiling and _____ equilibrium for a price floor.
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A recent study found that the demand and supply schedules for flying disks are as follows:
| Price | Quantity Demanded | Quantity Supplied |
|---|---|---|
| (Dollars per disk) | (Millions of disks) | (Millions of disks) |
| 11 | 1 | 15 |
| 10 | 2 | 12 |
| 9 | 4 | 9 |
| 8 | 6 | 6 |
| 7 | 8 | 3 |
| 6 | 10 | 1 |
Complete the first row of the following table by indicating the equilibrium price and the equilibrium quantity of flying disks in the absence of any price controls.
| Scenario | Market Price | Market Quantity | Binding or Not Binding |
|---|---|---|---|
| (Dollars per disk) | (Millions of disks) | ||
| No Price Control | N/A | ||
| Price Floor | |||
| Price Ceiling |
Flying disk manufacturers persuade the government that flying disk production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $2 above the equilibrium price.
Complete the second row of the previous table by indicating the new price and quantity of flying disks when Congress imposes a price floor $2 above the equilibrium price. Then indicate whether the price floor is binding or not binding.
Irate college students march on Washington and demand a reduction in the price of flying disks. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $3 below the former price floor.
Complete the final row of the previous table by indicating the new price and quantity of flying disks when Congress imposes a price ceiling $3 below the former price floor. Then indicate whether the price ceiling is binding or not binding.
