Price Ceiling and Price Floor

If the government creates a price ceiling of $30, which one of the following statements is correct?

• The quantity demanded = 60

• The quantity supplied = 160

• There is a surplus of 100

• There is a shortage of 100

If the government set the price at $700, would that be a price ceiling or floor?

• Price Ceiling

• Price Floor 

• Neither

If the government set the price at $300, what would be the result?

• Surplus of 4,000

• Surplus of 2,000

• Shortage of 4,000

• Shortage of 2,000

If the government creates a price floor of $80, which one of the following statements is correct?

• The quantity demanded = 60

• The quantity supplied = 180

• There is a shortage of 140

• There price floor is ineffective

Is the blue line located in the graph representing a price ceiling or price floor?

• Price ceiling

• Price floor

Does the red line located on the graph represent a price ceiling or price floor?

• Price ceiling

• Price floor

The Atlanta City Council recently implemented rent control on apartments in the city -- rent cannot be higher than $1,200/month. As a result will there be a shortage or surplus of apartments?

• Shortage

• Surplus

What is a price ceiling?

• A maximum price set by the government that can be charged for a product or service

• A minimum price set by the government that must be paid for a product or service

• The equilibrium price in a free market

• A price set by producers to maximize profit

What is a price floor?

• A maximum price set by the government that can be charged for a product or service

• A minimum price set by the government that must be paid for a product or service

• The equilibrium price in a free market

• A price set by producers to maximize profit

Which of the following is a common consequence of a price ceiling?

• Surplus of goods

• Shortage of goods

• Increase in quality

• Decrease in demand