### Price ceiling and price floor

##### Reference no: EM1312551

Price Ceiling and Price Floor

Introduction:

Price ceiling is the law that sets a maximum price below the equilibrium market price, but a price floor is the law that sets a maximum price above the market equilibrium price.

Problem Statement 1:

Using the data provided in the accompanying table, fill in the last column and then provide answers to the following:

 Price Quantity Demanded Quantity Supplied Surplus (+) or Shortage  (-) \$12 7 9 \$11 8 8 \$10 9 7 \$9 10 6 \$8 11 5 \$7 12 4

• Identify whether the number is a surplus, shortage, or neither.
• What is the efficient quantity?
• What price results in the efficient quantity? Using the data from the table, draw graphs of a demand and supply curve and indicate the point of equilibrium with the help of the Grapher tool. Press the Alt+PrintScrn keys simultaneously. Open a Microsoft Word document and insert the image by pressing the Ctrl+V.
• Suppose a price ceiling of \$8 is established. Does a surplus or shortage result? What is the amount of surplus or shortage?
• Suppose a price ceiling of \$12 is established. What is its effect?
• Suppose a price floor of \$12 is established. Explain its effect.

Deliverables Criteria:

Submit answers in a minimum of 100 words in a Microsoft Word document.

Problem Statement 2:

Deficits and Debt

Introduction:

Debt is a four-letter word that has put many nations into trouble. There is a cause for both personal and national debt.

Write a brief essay on Question 2 from the "Thinking Critically" section on "Deficits and Debt-Do We Spend Too Much?" on page 367 of the textbook.

Research the current size of the national debt as part of your answer.

Refer to the Congressional Budget Office Web site:

http://www.cbo.gov/

Deliverables and Format:

Submit answers in not more than 300 words in a Microsoft Word document. Be sure to cite your sources using APA style.Font: Arial; 12

Line Spacing: Double

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