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 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.
- 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.
- 450: only as many as landlords offer, though 750 renters want one at that rent.
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 creates a surplus of 300 apartments, since landlords offer 750 and renters want 450.
- 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.
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 $12. What does Kira expect the floor to do?
- It creates a shortage of 200 workers, since employers want 800 and 600 seek jobs.
- 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.
- Nothing: the market wage is $14, above the $12 floor, so the floor does not bind.
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.
- 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.
- 600 workers hold jobs at $16 instead of 700 at $14, and 200 workers seeking jobs have none.
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 grows to 150, the number of new renters, since the old shortage is already gone.
- It grows from 300 to 450: renters now want 900 and landlords still offer 450.
- 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.
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?
- $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.
- $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.
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 offer more apartments at $600 than at $1,200, since low rents attract owners.
- Landlords earn more in total at $800 than at $1,000, because they rent to more people.
- 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.
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 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 competition for workers pushes pay up.
- 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 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?
- 400: the size of the surplus of workers at $18, that is, the jobs that the floor removes.
- 900: workers seeking jobs set the number, so all 900 find jobs at the $18 floor.
- 700: the market number of jobs stays the same at $18, since a floor only changes the wage.
- 500: employers offer only 500 jobs at $18, though 900 workers seek jobs.
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.