Equilibrium, shortages, surpluses and price ceilings and floors

Grade 12 Social Studies Worksheet - Building Confidence

Circle the best answer.

1. Read this first

   Maple Court apartments (example figures, made up for practice)

   Rent per month	Apartments wanted	Apartments offered
   $600	900	300
   $800	750	450
   $1,000	600	600
   $1,200	450	750
   $1,400	300	900

   Economists debate how large the effects of rent rules are in real cities.

2. 1.

   A landlord group posts a rent of $800, with no law behind it. What does Ari find at that rent?

   • A surplus of 300: landlords offer 750 apartments and renters want just 450 of them.
   • A shortage of 750: each renter who wants an apartment at $800 goes without one.
   • No gap: renters want 750 and each of them can rent an apartment at that price.
   • A shortage of 300: renters want 750 apartments and landlords offer 450.
3. 2.

   A law caps rent at $800. How many apartments does Bo expect to be rented?

   • 600, the old market number, since a cap does not change what landlords decide to offer.
   • 300, the size of the shortage that the cap creates between the wanted and offered numbers.
   • 750, since the cap makes apartments cheap enough for every renter who wants one to rent.
   • 450: only as many as landlords offer, though 750 renters want one at that rent.
4. 3.

   A law caps rent at $1,200. What does Esme expect the cap to do?

   • It lowers rent below $1,000, because a cap lowers rents wherever the law applies.
   • It creates a surplus of 300 apartments, since landlords offer 750 and renters want 450.
   • Nothing: the market rent is $1,000, below the cap, so the cap does not bind.
   • It raises rent to $1,200, because a cap sets the new price that landlords may charge.

5. Weekend jobs in Pine Falls (example figures, made up for practice)

   Wage per hour	Jobs employers offer	Workers seeking jobs
   $10	900	500
   $12	800	600
   $14	700	700
   $16	600	800
   $18	500	900

   Economists debate how large the effects of wage rules are in real towns.

6. 4.

   A law sets a minimum wage of $16. What does Jun read in the table at that wage?

   • A surplus of 100: employers offer 700 jobs while 800 workers seek jobs at that wage.
   • A surplus of 200: employers offer 600 jobs while 800 workers seek jobs.
   • A shortage of 200: employers offer 800 jobs while just 600 workers seek jobs.
   • No gap: employers still offer 700 jobs at $16, the same as at the market wage.
7. 5.

   A law sets a minimum wage of $12. What does Kira expect the floor to do?

   • It cuts the wage to $12, since a legal floor sets the wage that employers must pay.
   • It lifts wages to $16, since a floor pushes pay up by the size of the gap.
   • Nothing: the market wage is $14, above the $12 floor, so the floor does not bind.
   • It creates a shortage of 200 workers, since employers want 800 and 600 seek jobs.
8. 6.

   Luz compares the $16 floor with the $14 market wage. Which pair of facts does the table show?

   • 600 workers hold jobs at $16 instead of 700 at $14, and 200 workers seeking jobs have none.
   • 600 workers hold jobs, and the 200 seeking workers without jobs lose nothing at all.
   • 800 workers gain $2 an hour, since every worker seeking a job earns the $16 floor.
   • 700 workers keep their jobs at $16, and 100 more workers find jobs at the new wage.
9. 7.

   Noah looks for the equilibrium wage in the table. Which statement is correct?

   • $18: that is the wage where the most workers seek jobs, 900 of them in total.
   • $10: that is the wage where employers want the most workers, 900 of them in total.
   • $14: that is the wage where 700 jobs are offered and 700 workers seek them.
   • $16: that is the wage halfway between the lowest and highest wages in the table.
10. 8.

    Economists debate how large the effects of rent rules are in real cities. Pia writes one claim from the table for a class debate. Which claim does the table support best?

    • Landlords earn more in total at $800 than at $1,000, because they rent to more people.
    • Landlords offer more apartments at $600 than at $1,200, since low rents attract owners.
    • At $800, renters want 300 more apartments than landlords offer.
    • A rent cap at $800 would make apartments cheaper for each renter who wants one.
11. 9.

    Economists debate how large the effects of wage rules are in real towns. A wage of $10 is posted in the job market. What happens there, and what does Ren expect to follow?

    • Employers want 900 workers but 500 seek jobs, so the wage stays at $10 because it is posted.
    • Employers and workers both want 700, so the market is in balance at the $10 wage.
    • Employers want 500 workers but 900 seek jobs, so competition for jobs pushes pay down.
    • Employers want 900 workers but 500 seek jobs, so competition for workers pushes pay up.
12. 10.

    a student's note (made up for practice). "A rent ceiling lowers rents and helps renters, wherever it is set." Zee edits the note for accuracy, using the Maple Court market. Which edit is correct?

    • A ceiling below the market rent lowers rent but creates a shortage; a ceiling above it does nothing.
    • A ceiling at any level raises the rent landlords may charge, which helps landlords.
    • A ceiling below the market rent lowers rent and creates a surplus of apartments for renters.
    • A ceiling above the market rent lowers rent a little and creates a small shortage.