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Assignment:
1) If there is a shortage due to a binding price ceiling, can the price rise to eliminate the shortage? Why or why not?
2) If there is a surplus due to a binding price floor, can the price drop to eliminate the surplus? Why or why not?
3) If there is a shortage due to a binding price ceiling, sellers use rationing mechanisms other than price to allocate the goods in shortage. Provide two such rationing mechanisms and explain why they are inefficient and/or undesirable.
4) What problems can rent control cause other than a housing shortage?
5) How can a black market and hoarding cause a shortage to become worse?
6) What is surplus of labor called in the labor market?
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