Price floors and ceilings can be plotted with supply and demand curves. Use the above graph to answer the questions.
Fill in the correct answer in the blanks provided.
1. What is the equilibrium price based on the natural market?
2. What quantity is demanded and what quantity is supplied at the market price?
a QD
bas
3. What quantity is demanded and what quantity is supplied if the government passes a law requiring the price to
be no higher than $30? This is called a price ceiling.
a. OD
b. OS
c. At this price there is a
4. What quantity is demanded and what quantity is supplied if the government passes a law requiring the price be
no lower than $80? This is called a price floor.
a QD
6. Os
c. At this price there is a
d. Who gains from the price floor?
Who gains from the price ceiling?