Consider the market for donuts. Suppose that, in a competitive market without govermment regulations, the equilibrium price of donuts is $1.50 each, and employees at donut shops earn $15.50 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 Statement The government prohibits donut shops from selling donuts for more than $1.80 each. There are many teenagers who would like to work at donut shops, but the minimum- wage law sets the hourly wage at $18.00. The government has instituted a legal minimum price of $1.80 each for donuts.
Consider the market for donuts. Suppose that, in a competitive market without govermment regulations, the equilibrium price of donuts is $1.50 each, and employees at donut shops earn $15.50 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 Statement The government prohibits donut shops from selling donuts for more than $1.80 each. There are many teenagers who would like to work at donut shops, but the minimum- wage law sets the hourly wage at $18.00. The government has instituted a legal minimum price of $1.80 each for donuts.
Chapter4: Supply And Demand: An Initial Look
Section: Chapter Questions
Problem 4TY: The following table summarizes information about the market for principles of economics textbooks:...
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Transcribed Image Text:Consider the market for donuts. Suppose that, in a competitive market without govermment regulations, the equilibrium price of donuts is $1.50 each,
and employees at donut shops earn $15.50 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
Statement
The government prohibits donut shops from selling donuts for more than $1.80 each.
There are many teenagers who would like to work at donut shops, but the minimum-
wage law sets the hourly wage at $18.00.
The government has instituted a legal minimum price of $1.80 each for donuts.
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