Quiz 9 1.n example of a price ceiling is the rent control system in New York City. An example of a price floor is the minimum wage. Many other examplesare possible. 2.A shortage of a good arises when there is a binding price ceiling. A surplus of a good arises when there is a binding price floor. 3.When the price of a good is not allowed to bring supply and demand into equilibrium, some alternative mechanism must allocate resources. If quantity supplied exceeds quantity demanded, so that there is a surplus of a good as in the case of a binding price floor, sellers may try to appeal to the personal biases of the buyers. If quantity demanded exceeds quantity supplied, so that there is a shortage of a good as in the case of a binding price ceiling, sellers can ration the good according to their personal biases, or make buyers wait in line. 4.Economists usually oppose controls on prices because prices have the crucial job of coordinating economic activity by balancing demand and supply. When policymakers
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