The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon. 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 is binding or nonbinding. Statement Statement Price Control Binding or Not The government prohibits gas stations from selling gasoline for more than $3.40 per gallon. Due to new regulations, gas stations that would like to pay better wages in order to hire more workers are prohibited from doing so. The government has instituted a legal minimum price of $3.40 per gallon for gasoline.
The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of gasoline is $3.00 per gallon. 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 is binding or nonbinding. Statement Statement Price Control Binding or Not The government prohibits gas stations from selling gasoline for more than $3.40 per gallon. Due to new regulations, gas stations that would like to pay better wages in order to hire more workers are prohibited from doing so. The government has instituted a legal minimum price of $3.40 per gallon for gasoline.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
1. The language of
Suppose that, in a competitive market without government regulations, the
Statement
|
Statement |
Price Control |
Binding or Not |
|---|---|---|
| The government prohibits gas stations from selling gasoline for more than $3.40 per gallon. | ||
| Due to new regulations, gas stations that would like to pay better wages in order to hire more workers are prohibited from doing so. | ||
| The government has instituted a legal minimum price of $3.40 per gallon for gasoline. |
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