The effect of rent control on college students.

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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. The government has instituted a legal minimum price of $2.30 per gallon for milk. The government prohibits grocery stores from selling milk for more than $2.30 per gallon. 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 $16.50 per hour.

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Chapter 4, Problem 2CQ

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The effect of rent control on college students.

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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. The government has instituted a legal minimum price of $2.30 per gallon for milk. The government prohibits grocery stores from selling milk for more than $2.30 per gallon. 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 $16.50 per hour.

Your uncle is very upset because after a recent snow storm he was charged $300 by a private snow- removal company to clear his driveway. He wants to petition the local village government to pass a law to put a cap on how much firms can charge for clearing driveways. As a student of economics, your uncle asks your advice on the wording of his petition. Provide a short response to your uncle in the form of a letter. Do you agree with him on the price ceiling, or disagree? How should this issue best be addressed?

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