Textbook Guide Economics: Ice Cream Cone, Price Ceiling, Price Floor

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ECO101H1 Full Course Notes

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Long queues or lines created by rationing are inefficient because they waste the buyers" time. Discrimination or buyer selection according to seller bias is inefficient because the good is not necessarily bought by the buyer who values it the highest as well as potentially unfair. The following is a binding price floor for the same market. Review questions: when governments impose legislated maximums for prices in markets, it is referred to as what, price upper bound, price ceiling, price lower bound, price floor, is correct. Governments sometimes impose legislated maximums for prices in markets called price ceilings: governments sometimes impose legislated minimums for prices in markets called what, price upper bound, price ceiling, price lower bound, price floor, is correct. A price ceiling or price floor can be either above or below the equilibrium point causing either a surplus or shortage: true, false. This is a classic case of a price ceiling being implemented.

Related Questions

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
Scenario	(Dollars per disk)	(Millions of disks)	Binding or Not Binding
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.

ochrejackal539

1.) An excise tax on a good typically reduces the net price received by the seller. (TRUE/FALSE)

2.) The burden of an excise tax on gasoline falls entirely on consumers of gasoline. (TRUE/FALSE)

3.) Rent controls are one of the few examples of a price floor in market economies. (TRUE/FALSE)

4.) Imposing a price ceiling below the equilibrium price of a good often leads to_____.

A) A greater supply of the good

B) A black market for the good

C) A rightward shift of the supply curve for the good.

D) A leftward shift of the demand curve for the good.

E) All of these

5.) Which of the following is true of price floors and ceilings?

A) Lead to the same price and quantity as in competitive market.

B) Lead to technical efficiency

C) Cause the demand curve to shift left

D) Usually result from government intervention

E) Cause the supply curve to shift right.

6.) Price ceilings often lead to black markets. (TRUE/FALSE)

7.) When minimum wage is above the equilibrium wage what occurs?

A) There will be a shortage of labor

B) There will be no effect on the number of people employed

C) There will be an increase in unemployment rate

D) There will be a decrease in unemployment rate

8.) An excise tax on a good typically reduces the price paid by the consumer (TRUE/FALSE)

9.) If a price ceiling is below the equilibrium price is imposed on a market, it will cause the quantity demanded to rise and the quantity supplied to fall. (TRUE/FALSE)

10.) Price floors often lead to black markets. (TRUE/FALSE)

11.) If an excise tax is imposed on restaurant meals what occurs?

A) Fewer meals will be produced and sold

B) More meals will be produced and sold

C) Market price of the meals will fall

D) Government tax revenue will fall.

mauveyellowjacket715

Task 2: Interpreting Graphs

The student will identify and explain specific effects of price controls at given prices.

Using the hypothetical information in the table on the market for gasoline, complete the following questions:

Price of Gasoline (per gallon)	Quantity Demanded (millions of gallons per week)	Quantity Supplied (millions of gallons per week)
$0.50	85	0
$1.00	75	15
$1.50	65	20
$2.00	55	25
$2.50	45	30
$3.00	35	35
$3.50	25	45
$4.00	15	55

Graph the demand and supply for gasoline using the myeconlab grapher software http://www.mathxl.com/info/grapher.aspx. Please start your graph at the origin and label each axis and each curve.

Screenshot instructions: To paste the graphed image on a Word document, press and hold âALT,â then press âPrtScrnâ while viewing the graphed image. Select a point on the Word document to paste the graph. Press and hold âCrtl,â then press âV.â

(Note: Change the numbers on each axis. Label each axis and each curve. Start your graph from the origin.)

Fill in the blanks highlighted in yellow.

B. The equilibrium price of gasoline is _________ and the equilibrium quantity is _____________.

C. The government imposes a price ceiling of $2.50 in this market. The prevailing price in this market is now _________. The quantity demanded is now _____________ and the quantity supplied is _____________.

D. The price ceiling results in a (SURPLUS OR SHORTAGE) _______________________ in the amount of _______________________.

Submission Requirements:

Attach a separate Word document for each task; all answers should be included in this document.

Myeconlab grapher software must be used for the graphed image.

A screen shot of the graphed image must be pasted to the Word document. Directions are listed within the assessment.

mauvecicada430

Textbook Guide Economics: Ice Cream Cone, Price Ceiling, Price Floor

ECO101H1 Full Course Notes

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