In the late 3rd century AD, Diocletian rose to assume the throne of the Roman Empire. At the time, the empire had just emerged from the "Crisis of the 3rd Century" in which the nation faced internal strife and corruption, invasion by neighboring tribes, and a splintering of the imperial office -- all of which contributed to rapidly worsening inflation, or debasement of the gold currency. In 301 AD, Diocletian issued the "Edict on Maximum Prices" in an attempt to combat this inflation. This edict placed a maximum price on a set of approximately 1,400 goods commonly bought and sold within the borders of the Roman Empire. Consider the market for wheat during Diocletian's reign. Assuming the edict was binding, what do you think was the effect in this particular market? What likely happened to the quantity transacted and welfare? Draw a carefully labeled graph and explain.

In the late 3rd century AD, Diocletian rose to assume the throne of the Roman Empire. At the time, the empire had just emerged from the "Crisis of the 3rd Century" in which the nation faced internal strife and corruption, invasion by neighboring tribes, and a splintering of the imperial office -- all of which contributed to rapidly worsening inflation, or debasement of the gold currency. In 301 AD, Diocletian issued the "Edict on Maximum Prices" in an attempt to combat this inflation. This edict placed a maximum price on a set of approximately 1,400 goods commonly bought and sold within the borders of the Roman Empire. Consider the market for wheat during Diocletian's reign. Assuming the edict was binding, what do you think was the effect in this particular market? What likely happened to the quantity transacted and welfare? Draw a carefully labeled graph and explain.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 29P: The prime interest rate is the rate that banks charge their best customers. Based on the nominal...

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