This worksheet requires students to examine the economic impact of applying a binding price ceiling in the market for gasoline as well as to calculate and compare the resulting amount of economic welfare generated by such a policy.
After completing this worksheet, students will be able to:
-Identify the areas representing consumer, producer, and economic surplus in addition to deadweight loss.
-Calculate the values for consumer, producer, and economic surplus.
-Identify whether a price control acts as a price ceiling or a price floor.
-Identify the economic impact of applying a binding price ceiling on the price and quantity of a product exchanged.
-Compare the distributional effects of enacting a binding price control.
-Illustrate the impact of imposing a price floor on the market for milk.