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?
- 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.
- Employment among minimum-wage workers rose in 2025, since the real minimum had fallen so far.
- 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.
- Nothing: the base year does not change any dollar figure like $7.25, since real values cannot depend on it.
- The dollar figures ($10.88 or $4.83), not the size of the decline, which is about one-third either way.
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?
- Demand rose by 80, since a shortage draws more households to look for an apartment.
- Supply fell by 80 while demand held at 900, so owners respond to a cap more over time.
- Nothing changed in the market, since the same cap leaves the same shortage each year.
- The cap rose by 80 dollars over the years, so landlords had less reason to rent out.
Six renters, six landlords (example figures, made up for practice)
Renter Most the renter will pay Landlord Least the landlord will take Renter 1 $1,300 Landlord 1 $700 Renter 2 $1,200 Landlord 2 $800 Renter 3 $1,100 Landlord 3 $900 Renter 4 $1,000 Landlord 4 $1,000 Renter 5 $900 Landlord 5 $1,100 Renter 6 $800 Landlord 6 $1,200 Each landlord has one apartment and each renter wants one. A trade at some rent gains the renter the most minus the rent, and the landlord the rent minus the least. A city caps rent at $800.
A city caps rent at $800. Esme totals the gains from trade. Which statement does the card support?
- Gains from trade stay at $1,200, because the same renters and landlords exist under the cap.
- Gains fall from $1,200 to at most $1,000, since just 2 apartments are offered at $800.
- Gains from trade rise, because renters pay less rent and so renters keep more of each trade.
- Gains from trade fall to $0, since each trade in the market is cancelled by the cap.
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?
- Market N started with fewer units sold, so its surplus has to be smaller.
- Market M's floor is higher in dollars, so a higher floor means a larger surplus.
- 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.
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 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.
- The dollar value of the federal minimum stayed the same from 2009 through 2025, per the card.
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 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.
- The effect is small and its sign unsettled, so three studies cannot settle the debate.
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 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.
- 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.
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?
- The cap's real value fell by 30%, since prices rose 30%, so it binds 30% below the market rent.
- The cap is still $900 in real terms, so it still does nothing, just as it did ten years ago.
- 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.
A cap or vouchers in Elm Park (example figures, made up for practice)
Rent Wanted before Wanted with vouchers Offered $700 550 750 350 $800 450 650 450 $900 350 550 550 $1,000 250 450 650 A city can cap rent at $700, or give vouchers that add 200 renters wanting apartments at each rent. Economists debate how large such effects are in real cities.
Noah compares the cap and the vouchers on how many apartments get rented. Which comparison fits the card?
- Neither: both policies leave 200 households wanting an apartment and unable to find one.
- Vouchers, but rent rises just to $800 and 450 apartments are rented, as before.
- Vouchers: 550 apartments are rented against 350 under the cap, though rent rises to $900.
- The cap: each renter who gets an apartment pays $700, so the cap puts the most households in homes.