The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $3.50 per gallon.
Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or Price Control Binding or nonbinding.
Statement
1. The government has instituted a legal minimum price of $3.90 per gallon for milk.
2. There are many teenagers who would like to work at grocery stores, but they are not hired due to minimum-wage laws.
3. The government prohibits grocery stores from selling milk for more than $3.90 per gallon.

The language of price controls Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $3.50 per gallon.

Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or Price Control Binding or nonbinding.

The government prohibits grocery stores from selling milk for more than $3.90 per gallon

Explanation:

The price control has to do with total decision in making price tag such as the government prohibits grocery stores from selling milk for more than $3.90 per gallon. This reflects that only government has sole decision on the price and makes them the price control.