Part 1 The question below assumes we are working with the market for fast food restaurants within a city Assume that the city government imposes a price ceiling on fast food restaurants and that this ceiling is set below the equilibrium price of fast food Which of the following is the direct effect of this price ceiling a shortage of fast food b surplus of fast food c increase in demand for fast food within the city d increase in demand for fast food substitutes within the city e answers a and c f answers b and c g the price ceiling will have no effect on this market Part 2 The question below assumes we are working with the market for fast food restaurants within a city Assume that the city government imposes a price floor on fast food restaurants and that this floor is set below the equilibrium price of fast food Which of the following is the direct effect of this price ceiling a shortage of fast food b surplus of fast food c decrease in demand for fast food within the city d decrease in demand for fast food substitutes within the city e answers a and c f answers b and c g the price ceiling will have no effect on this market Part 3 The question below assumes we are working with the market for fast food restaurants within a city Assume that the city government imposes a price ceiling on fast food restaurants, that this ceiling is set below the equilibrium price of fast food and that this ceiling leads to the exit of fast food suppliers from the market Which of the following is most likely to occur a shortage of fast food will increase b shortage of fast food will decrease c surplus of fast food will increase d surplus of fast food will decrease Part 4 Assume that in the market for good X, government has set a price ceiling below the existing market price Which of the following is the most likely indirect effect of this price ceiling a increase in the demand for substitutes b increase in the demand for complements c shortage d surplus e there is no indirect effect when a price ceiling is set below the market price

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Question: Part 1 The question below assumes we are working with the market for fast food restaurants within a city. Assume that the city government imposes

Part 1

The question below assumes we are working with the market for fast food restaurants within a city.

Assume that the city government imposes a price ceiling on fast food restaurants and that this ceiling is set below the equilibrium price of fast food. Which of the following is the direct effect of this price ceiling:

	a.	shortage of fast food
	b.	surplus of fast food
	c.	increase in demand for fast food within the city
	d.	increase in demand for fast food substitutes within the city
	e.	answers a and c
	f.	answers b and c
	g.	the price ceiling will have no effect on this market

Part 2

The question below assumes we are working with the market for fast food restaurants within a city.

Assume that the city government imposes a price floor on fast food restaurants and that this floor is set below the equilibrium price of fast food. Which of the following is the direct effect of this price ceiling:

	a.	shortage of fast food
	b.	surplus of fast food
	c.	decrease in demand for fast food within the city
	d.	decrease in demand for fast food substitutes within the city
	e.	answers a and c
	f.	answers b and c
	g.	the price ceiling will have no effect on this market

Part 3

The question below assumes we are working with the market for fast food restaurants within a city.

Assume that the city government imposes a price ceiling on fast food restaurants, that this ceiling is set below the equilibrium price of fast food and that this ceiling leads to the exit of fast food suppliers from the market. Which of the following is most likely to occur:

	a.	shortage of fast food will increase
	b.	shortage of fast food will decrease
	c.	surplus of fast food will increase
	d.	surplus of fast food will decrease

Part 4

Assume that in the market for good X, government has set a price ceiling below the existing market price.

Which of the following is the most likely indirect effect of this price ceiling:

	a.	increase in the demand for substitutes
	b.	increase in the demand for complements
	c.	shortage
	d.	surplus
	e.	there is no indirect effect when a price ceiling is set below the market price

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