c. At the government-controlled price of $3 there will be
a(n) of hats.
d. Suppose now that the government believes the island’s
hat makers are not paid enough for their hats and that
islanders should pay no less than $6 for a hat. They can
achieve this by imposing a.
e. At the new government-controlled price of $6 there will
be a(n) of hats.
3. Fill in the blanks to make the following statements correct.
a. Rent controls are a form of price.
b. Binding rent controls lead to a in the availability of
rental housing.
c. The short-run supply curve for rental housing is quite
the long-run supply curve is quite. A housing shortage
caused by rent controls grows over time.
d. The group that benefits the most from rent controls is
The two groups that are most harmed by rent controls are
and.
4. Fill in the blanks to make the following statements correct.
a. We say that a market free to achieve its market-clearing
price and quantity is efficient because total economic
is maximized.
b. For any given quantity exchanged, the economic surplus
is shown by the area under the curve and above the
curve.
c. Binding price controls lead to a in the quantity of a
product produced and consumed. Each of the units that
