Question

Suppose that, in a competitive market without government regulations the equilibrium price of gasoline is $3.00 per gallon.

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 is binding or nonbinding.
Choices for Price Control is:________.
A. Price ceiling
B. Price floor
Choices for Binding or Not is:_______.
A. Binding
B. Non-Binding
Statement Price Control Binding or Not
There are many teenagers who would like to work at gas stations, but they are not hired due to minimum wage law
___________ ___________
The government prohibits gas stations from selling gasoline for more than $2.70 per gallon
___________ ___________
The government has instituted a legal minimum price of $2.70 per gallon for gasolone.
___________ ___________

Answer 1

price floor , binding

price ceiling binding

price floor , non binding

Step-by-step explanation:

A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.

Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price

Because firms are unable to hire workers due to the minimum wage laws., it means it is binding price floor

Equilibrium price is $3 and the maximum price is $2.70 . Thus, it is a binding price ceiling

Equilibrium price is $3 and the minimum price is $2.70 . Thus, it is a binding floor