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2. The language of price controls Consider the market for milk. Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $3.50 per gallon, and employees at grocery stores eam $9.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect Due to new regulations, grocery stores that would like to pay better wages in order to hire more workers are prohibited from paying more than $7.50 per hour. The government has instituted a legal minimum price of $3.00 per gallon for milk. The government prohibits grocery stores from selling milk for more than $3.00 per gal

2. The language of price controls Consider the market for milk. Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $3.50 per gallon, and employees at grocery stores eam $9.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect Due to new regulations, grocery stores that would like to pay better wages in order to hire more workers are prohibited from paying more than $7.50 per hour. The government has instituted a legal minimum price of $3.00 per gallon for milk. The government prohibits grocery stores from selling milk for more than $3.00 per gal

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
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2. The language of price controls Consider the market for milk. Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $3.50 per gallon, and employees at grocery stores eam $9.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect Due to new regulations, grocery stores that would like to pay better wages in order to hire more workers are prohibited from paying more than $7.50 per hour. The government has instituted a legal minimum price of $3.00 per gallon for milk. The government prohibits grocery stores from selling milk for more than $3.00 per gal
Transcribed Image Text:2. The language of price controls Consider the market for milk. Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $3.50 per gallon, and employees at grocery stores eam $9.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect Due to new regulations, grocery stores that would like to pay better wages in order to hire more workers are prohibited from paying more than $7.50 per hour. The government has instituted a legal minimum price of $3.00 per gallon for milk. The government prohibits grocery stores from selling milk for more than $3.00 per gal
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