Equilibrium, shortages, surpluses and price ceilings and floors
Grade 12 Social Studies Worksheet - Challenge Me
Circle the best answer.
Read this first
Use the table
The federal minimum wage and consumer prices (real data: U.S. Department of Labor; Bureau of Labor Statistics)
Year Federal minimum wage CPI-U annual average 2009 $7.25 214.537 2019 $7.25 255.657 2025 $7.25 321.943 CPI-U is the Consumer Price Index for All Urban Consumers, with 1982-84 as 100. The federal minimum was set at $7.25 on July 24, 2009. To restate dollars from one year in another year's dollars, multiply by the ratio of the two CPI-U values.
Jun compares the years on the card. Which claim does the card support best?
- Employment among minimum-wage workers rose in 2025, since the real minimum had fallen so far.
- The $7.25 minimum bought about half as much in 2025, since consumer prices rose about 50%.
- The real value of the minimum is unchanged, since its dollar value has stayed at $7.25 since 2009.
- The $7.25 minimum bought about one-third less in 2025 than in 2009, since prices rose about 50%.
Ari wants to restate the decline in 2025 dollars, not 2009 dollars. What does the choice of base year change?
- The direction: in 2025 dollars the $7.25 wage rose, since prices in 2025 are higher than in 2009.
- The size of the decline: in 2009 dollars the $7.25 wage shows no fall, because it was set in 2009.
- The dollar figures ($10.88 or $4.83), not the size of the decline, which is about one-third either way.
- Nothing: the base year does not change any dollar figure like $7.25, since real values cannot depend on it.
A federal floor of $7.25 applies in each town. Milo reads the table. Where does the $7.25 federal floor bind, and what does that show?
- Only in Town P, where the $7.00 market wage is below the floor; Q and R are unaffected.
- In Towns P and Q, since both market wages are less than the $12.00 paid in Town R.
- In all three towns, since a legal floor applies in the same way wherever the law reaches.
- Only in Town R, where the market wage is highest, so the most workers are affected there.
The cap was set in year 1 and never changed. In Harbor Row the shortage grew from 100 to 180 under the same cap. What does Pia conclude from the card?
- The cap rose by 80 dollars over the years, so landlords had less reason to rent out.
- Demand rose by 80, since a shortage draws more households to look for an apartment.
- Nothing changed in the market, since the same cap leaves the same shortage each year.
- Supply fell by 80 while demand held at 900, so owners respond to a cap more over time.
Both markets start with 1,000 units sold at equilibrium. Both markets set the same floor, $2 above equilibrium. How does Bo explain a surplus of 400 in one and 40 in the other?
- A surplus depends just on how far the floor lies above equilibrium, so one figure must be wrong.
- Buyers and sellers in Market M respond more to prices, so the same floor opens a much wider gap.
- Market M's floor is higher in dollars, so a higher floor means a larger surplus.
- Market N started with fewer units sold, so its surplus has to be smaller.
Use the table
The federal minimum wage and consumer prices (real data: U.S. Department of Labor; Bureau of Labor Statistics)
Year Federal minimum wage CPI-U annual average 2009 $7.25 214.537 2019 $7.25 255.657 2025 $7.25 321.943 CPI-U is the Consumer Price Index for All Urban Consumers, with 1982-84 as 100. The federal minimum was set at $7.25 on July 24, 2009. To restate dollars from one year in another year's dollars, multiply by the ratio of the two CPI-U values.
Ren lists four claims. Which claim goes beyond what the card can support?
- Consumer prices, measured by the CPI-U, were about 50% higher in 2025 than in 2009.
- The dollar value of the federal minimum stayed the same from 2009 through 2025, per the card.
- The real value of $7.25 was lower in 2019 than in 2009, since prices rose in between.
- The $7.25 floor reduced employment among minimum-wage workers between 2009 and 2025.
Three made-up studies of three regions. Economists debate how large the effects are in real towns. Kira reads three studies of the same 10% rise. Which conclusion do the studies support?
- The studies show that a minimum wage costs jobs, since one study found a fall in employment.
- The effect is small and its sign unsettled, so three studies cannot settle the debate.
- The studies show that a minimum wage adds jobs, since Study C found a rise in employment.
- The three results average to about zero, so the true effect in each region must be zero.
A rent cap set at the old market rent (example figures, made up for practice)
Rent Wanted before Wanted after Offered $800 800 1,000 600 $900 700 900 700 $1,000 600 800 800 $1,100 500 700 900 $1,200 400 600 1,000 A cap of $900 was set when the market rent was $900. Later, 200 more households wanted apartments at each rent.
A $900 cap did nothing for years. After the rise in demand, what does Luz expect?
- The cap now binds: rent stays at $900 and 200 households wanting an apartment find none.
- A surplus of 200 appears, because more households mean more apartments are offered.
- The cap still does nothing, because it equals last year's market rent and caps are set once.
- Rent rises to $1,000 anyway, because a cap only limits what landlords may report on paper.
Card
a rent cap (made up for practice). A city fixed its rent cap at $900 ten years ago and never changed it. Ten years ago the market rent was also $900, so the cap did nothing. Since then consumer prices rose 30%, and the market rent rose with prices to about $1,170.
Tala explains why the old cap now matters. Which explanation fits the card?
- In real terms the cap fell about 23% ($900 ÷ $1,170), so it now binds below the $1,170 market rent.
- The cap's real value rose, since the market rent in dollars is higher than ten years ago.
- The cap is still $900 in real terms, so it still does nothing, just as it did ten years ago.
- The cap's real value fell by 30%, since prices rose 30%, so it binds 30% below the market rent.
A wage floor in the Dale job market (example figures, made up for practice)
Wage per hour Jobs offered Workers seeking jobs $9 1,100 700 $10 1,000 800 $11 900 900 $12 800 1,000 $13 700 1,100 Total pay in an hour is the wage times the jobs. Economists debate how large the effects of wage floors are in real towns.
A $12 floor is set in the Dale job market. How does Zee describe its effect on workers as a group?
- As a group they earn more, since the wage rose from $11 to $12 for each person who is employed.
- As a group they earn less: pay falls from $9,900 to $9,600 an hour, though 800 earn $1 more each.
- Total pay falls to $8,800, since the 200 workers seeking jobs without work earn nothing.
- Total pay is unchanged at $9,900, since the $800 gained by those who keep jobs offsets the loss.