the link between resource and product markets Attempts: Average:/1 2. The langua
ID: 1133316 • Letter: T
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the link between resource and product markets Attempts: Average:/1 2. The language of price controls Consider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price celling 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 Price Control Effect tatement The government has instituted a legal minimum price of $5 each for hamburgers. The government prohibits fast food restaurants from selling hamburgers for more than $5 each. Due to new regulations, fast food restaurants that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour Grade It Now Save & ContinueExplanation / Answer
1) price flooring (as govt has defined a minimum price of $5 for each hamburger.)
Surplus, This will create surplus in market as producers will be getting higher price of hamburgers.
2.price ceiling (as govt has defined maximum price of $5 for each hamburger)
Deficit, the will create deficit in market as according to the law of supply higher the price, higher is the demand and the vice versa.
3. Price ceiling (as $14.5 is set as the upper limit of wages)
Shortage, due to lack of labour.
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