Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. A binding price floor is than the free-market
equilibrium price.
b. A binding price ceiling is than the free-market
equilibrium price.
c. Starting from a free-market equilibrium, a binding price
ceiling leads to excess and a in the quantity
exchanged.
d. With a binding price ceiling, the price is not allowed to
to allocate the available supply.
e. Starting from a free-market equilibrium, a binding price
floor leads to excess and a in quantity exchanged.
f. With a binding price floor, the price is not allowed to
to eliminate the excess. Often, the government steps in
to the excess supply.
g. In markets for agricultural products, the government
often imposes a price in an effort to protect producers.
h. In markets for products such as housing or gasoline, the
government often imposes a price in an effort to
protect consumers.
2. Consider the market for straw hats on a tropical island. The
demand and supply schedules are given below.