Equilibrium, shortages, surpluses and price ceilings and floors
Grade 12 Social Studies Worksheet - Building Confidence
Circle the best answer.
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.
A landlord group posts a rent of $800, with no law behind it. What does Ari find at that rent?
- A shortage of 750: each renter who wants an apartment at $800 goes without one.
- A shortage of 300: renters want 750 apartments and landlords offer 450.
- A surplus of 300: landlords offer 750 apartments and renters want just 450 of them.
- No gap: renters want 750 and each of them can rent an apartment at that price.
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.
- 450: only as many as landlords offer, though 750 renters want one at that rent.
- 750, since the cap makes apartments cheap enough for every renter who wants one to rent.
- 300, the size of the shortage that the cap creates between the wanted and offered numbers.
A law caps rent at $1,200. What does Esme expect the cap to do?
- It raises rent to $1,200, because a cap sets the new price that landlords may charge.
- It lowers rent below $1,000, because a cap lowers rents wherever the law applies.
- Nothing: the market rent is $1,000, below the cap, so the cap does not bind.
- It creates a surplus of 300 apartments, since landlords offer 750 and renters want 450.
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.
A law sets a minimum wage of $16. What does Jun read in the table at that wage?
- A surplus of 200: employers offer 600 jobs while 800 workers seek jobs.
- No gap: employers still offer 700 jobs at $16, the same as at the market wage.
- A shortage of 200: employers offer 800 jobs while just 600 workers seek jobs.
- A surplus of 100: employers offer 700 jobs while 800 workers seek jobs at that wage.
A law sets a minimum wage of $12. What does Kira expect the floor to do?
- Nothing: the market wage is $14, above the $12 floor, so the floor does not bind.
- It lifts wages to $16, since a floor pushes pay up by the size of the gap.
- It cuts the wage to $12, since a legal floor sets the wage that employers must pay.
- It creates a shortage of 200 workers, since employers want 800 and 600 seek jobs.
Luz compares the $16 floor with the $14 market wage. Which pair of facts does the table show?
- 600 workers hold jobs, and the 200 seeking workers without jobs lose nothing at all.
- 600 workers hold jobs at $16 instead of 700 at $14, and 200 workers seeking jobs have none.
- 700 workers keep their jobs at $16, and 100 more workers find jobs at the new wage.
- 800 workers gain $2 an hour, since every worker seeking a job earns the $16 floor.
Economists debate how large the effects of rent rules are in real cities. A new employer brings 150 more renters wanting apartments at each rent. The cap stays at $800. What does Milo expect for the shortage?
- It disappears, because the rent rises until the 150 new renters can be fitted in.
- It stays at 300, because the cap is still $800 and the cap fixes the size of the shortage.
- It grows from 300 to 450: renters now want 900 and landlords still offer 450.
- It grows to 150, the number of new renters, since the old shortage is already gone.
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.
Noah looks for the equilibrium wage in the table. Which statement is correct?
- $16: that is the wage halfway between the lowest and highest wages in the table.
- $10: that is the wage where employers want the most workers, 900 of them in total.
- $18: that is the wage where the most workers seek jobs, 900 of them in total.
- $14: that is the wage where 700 jobs are offered and 700 workers seek them.
A wage of $10 is posted in the job market. What happens there, and what does Ren expect to follow?
- Employers want 500 workers but 900 seek jobs, so competition for jobs pushes pay down.
- Employers and workers both want 700, so the market is in balance at the $10 wage.
- Employers want 900 workers but 500 seek jobs, so competition for workers pushes pay up.
- Employers want 900 workers but 500 seek jobs, so the wage stays at $10 because it is posted.
A floor is set at $18. How many jobs does Tala expect to exist at that wage?
- 900: workers seeking jobs set the number, so all 900 find jobs at the $18 floor.
- 500: employers offer only 500 jobs at $18, though 900 workers seek jobs.
- 400: the size of the surplus of workers at $18, that is, the jobs that the floor removes.
- 700: the market number of jobs stays the same at $18, since a floor only changes the wage.