Determining Changes in Equilibrium Price and Quantity After a Price Ceiling is Imposed

Chapter 6 Pre-lecture Assignment
The following questions and exercises are meant to complement the reading assignments from the text.
They will prepare you for the material presented in the lectures. Read the text first and then write or
type out the answers to the following questions. It is okay to use definitions right out of the textbook.
When asked for examples, however, be sure to ones that are different from those in the text.
Your answers should be typed (or written) and saved as a pdf and uploaded to D2L (in D2L, choose the
Assessments tab and then Dropbox.) In word you can choose to save your document as a pdf, or Cam
Scanner is a nice app you can put on your phone to turn pictures into a pdf and then you can upload the
pdf directly to D2L. Please do not restate the questions in your answers: I only want to read your
answers. When you are writing out an answer, number your answers with the associated number on the
question and use complete sentences and punctuation in your text. Finally, leave at least one row in
between the answers for each question.
1. Read Chapter 6 and watch the following two video problem walk-throughs: “Determining
Changes in Equilibrium Price and Quantity After a Price Ceiling is Imposed” and “Analyzing the
Impact of a Binding Price Floor on a Market” I will put links in the D2L Week __ folder and they
can also be found in the MindTap outline under Chapter 6>Practice and Apply>Video Problem
Walk-Throughs. Rate your understanding of each video problem walk-through on a scale of 1 to
10, where 10 is that you totally understand the material. State one question you have from each
video.
2. Price Floors and Ceilings
a. How are price floors and ceilings similar?
b. How are they different?
c. How do you know if a ceiling is not binding?
d. Create an example of a non-binding ceiling.
e. How is the market outcome different when there is a binding price floor compared to
when there is a non-binding price floor? (That is, what happens to price and quantity
supplied and demanded in the case of a binding floor vs non-binding floor?)
3. Suppose that you have decided that your maximum value of a particular Blu Ray movie at Target
is $10.
a. What percent tax do you pay for things at Target where you live?
b. How much tax will you pay on the $10 movie?
c. Will paying this tax prevent you from buying this movie? Explain your answer.
4. Do you think it is better for a buyer to pay a tax or a seller to pay a tax? (This is a trick question
) Explain.

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