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Home / Questions / Consider the market for hamburgers. Suppose that, in a competitive market without government regulat

Consider the market for hamburgers. Suppose that, in a competitive market without government regulat

Consider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour. 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 results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market.

Statement Price Control Effect
The government prohibits fast food restaurants from selling hamburgers for more than $5 each. Price ceiling or price floor  

Shortage, surplus, or no effect

Due to new regulations, fast food restaurants that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour. Price ceiling or price floor    Shortage, surplus, or no effect
The government has instituted a legal minimum price of $5 each for hamburgers. Price ceiling or floor price   Shortage, surplus, or no effect
 

Apr 24 2020 View more View Less

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