Define a price ceiling and explain how it affects resource allocation in a market. Give a real-world example of a price ceiling.
What will be an ideal response?
A price ceiling is an upper limit imposed on the price of a good. It holds the price below the equilibrium price, and the result is that the quantity demanded is greater than the quantity supplied. This causes a shortage. Rent control in New York City and other places is an example of a price ceiling.
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An increase in the demand for loanable funds, other things constant, will increase the interest rate
a. True b. False Indicate whether the statement is true or false
Under what conditions could minimum wage laws lead to increases in unemployment?
The amount of goods and services produced from each unit of labor input is called
a. opportunity cost. b. productivity. c. externality. d. marginal benefit.
Related to the Economics in Practice on p. 297: According to the Economics in Practice, in a town with multiple newspapers
A. there is virtually no possibility for firms to produce a similar product and remain in business. B. there are strong incentives for firms to produce a similar product and focus on the part of the market with the most competition. C. there are strong incentives for firms to differentiate and focus on the part of the market with less competition. D. there are virtually no incentives for firms to differentiate and focus on the part of the market with less competition.