Lec 5-1

Question 1

The Limit on a price is under the equilibrium

Answer 1

Binding Price ceiling

Question 2

Large effect of Binding Price Ceiling

Answer 2

Shortage of product. Less quantity supplied; less efficient producers stop producing

Question 3

Result of a binding price floor

Answer 3

Excess supply

Question 4

Limit on minimum price above equilibrium

Answer 4

Binding price floor

Question 5

The highest value consumers buy/get the price, makes the surplus as large as possible

Answer 5

Efficient rationing

Question 6

Lowest value consumers get the widget. Total surplus is as small as possible.

Answer 6

Perfectly inefficient rationing

Question 7

“Informal Market,” around when binding price ceilings are enacted

Answer 7

Black Market