ECS1501
Economics 1A
Unique Number: 733269
Assignment: 03
Semester: 02
Year: 2020
Due Date: 05 October 2020
Page 1 of 6
, 3.1 A government-imposed maximum price at which a good can be sold is called a price
[1] floor.
[2] ceiling.
[3] support.
[4] suspension.
Answer is 2
“When a price control measure establishes an upper limit, it is a price ceiling. For example, government
may believe that the market price of bread is too high, and to help poor households, it puts a price
ceiling on the price of bread. It is then illegal to charge a price higher than the ceiling price.”
Question 3.2 is based on the following diagram of the market for fish.
3.2 If the government were to adopt a price ceiling policy at a ceiling of R53/kg,
[1] price and quantity will stay the same.
[2] both price and quantity sold will fall.
[3] price will rise and quantity will fall.
[4] price will fall and quantity will rise.
Answer is 4
“Thus, an excess demand is created. Price decrease, qty supplied decrease and qty demanded increase.”
3.3 Price ceilings are primarily targeted to help __________, while price floors generally benefit __________.
[1] producers; no one
[2] consumers; producers
[3] increase tax revenue for governments; consumers
[4] producers; consumers
Answer is 2
“A price ceiling is a government- or group-imposed price control, or limit, on how high a price is charged for a
product, commodity, or service. Governments use price ceilings to protect consumers from conditions that could
make commodities prohibitively expensive.”
Page 2 of 6
Economics 1A
Unique Number: 733269
Assignment: 03
Semester: 02
Year: 2020
Due Date: 05 October 2020
Page 1 of 6
, 3.1 A government-imposed maximum price at which a good can be sold is called a price
[1] floor.
[2] ceiling.
[3] support.
[4] suspension.
Answer is 2
“When a price control measure establishes an upper limit, it is a price ceiling. For example, government
may believe that the market price of bread is too high, and to help poor households, it puts a price
ceiling on the price of bread. It is then illegal to charge a price higher than the ceiling price.”
Question 3.2 is based on the following diagram of the market for fish.
3.2 If the government were to adopt a price ceiling policy at a ceiling of R53/kg,
[1] price and quantity will stay the same.
[2] both price and quantity sold will fall.
[3] price will rise and quantity will fall.
[4] price will fall and quantity will rise.
Answer is 4
“Thus, an excess demand is created. Price decrease, qty supplied decrease and qty demanded increase.”
3.3 Price ceilings are primarily targeted to help __________, while price floors generally benefit __________.
[1] producers; no one
[2] consumers; producers
[3] increase tax revenue for governments; consumers
[4] producers; consumers
Answer is 2
“A price ceiling is a government- or group-imposed price control, or limit, on how high a price is charged for a
product, commodity, or service. Governments use price ceilings to protect consumers from conditions that could
make commodities prohibitively expensive.”
Page 2 of 6
