Download Price Floors and Ceilings Practice

Economics
Ch. 6.1,2
Names:
Date:
Price Floors and Ceilings Practice
Part I: Use the chart below to answer the questions that follow.
1. What is the market clearing price (equilibrium)?
2. What quantity is demanded and what quantity is supplied at the market clearing price?
a. Quantity demanded:
b. Quantity supplied:
3. What quantity is demanded and what quantity is supplied if the government passes a law setting a maximum
price of $30?
a. Quantity demanded:
b. Quantity supplied:
4. What quantity would be supplied and what quantity would be demanded if the government passes a law setting
a minimum price of $80?
a. Quantity demanded:
b. Quantity supplied:
Part II: Use the information and the chart below to answer the questions that follow.
1. Everyone needs a place to live, so explain how it can be that more apartments will be demanded at lower price
than at a higher price?
2. On any given day, there are only a certain number of apartments in the city, so why isn’t the supply curve of
apartments a vertical line? In other words, how can it be true that there will be more apartments for rent at
high prices than at low prices?
3. How many total apartments are available at the rent control price?
4. How many apartments do consumers want to rent at the rent control price?
5. What is the problem facing the city and the people who want to rent apartments?
The mayor and the city council have been considering three options:
a. Let apartments rise to the market price.
b. Continue the rent controls and the let people find and rent apartments on a first-come, first-served basis.
Anyone convicted of collecting or paying more than the rent control price will be subject to fines and
imprisonment.
c. Conduct random drawings each month to fill all vacant apartments.
6. Who benefits and who loses under each option?
Option a)
Option b)
Option c)
7. What do you think the mayor and the city council should do? Explain your answer.
Part III: Below is a table showing the demand for Frisbees. Plot these data on the axes provided. Label the demand
curve ‘D’ and the supply curve ‘S.’ Then answer the questions that follow.
Fill in the blank spaces or cross out the incorrect words in parentheses.