Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 6 - Supply, Demand, and Government Policies - Questions For Review - Page 129: 2

Answer

Shortages are caused by binding price ceilings and surpluses are caused by binding price floors.

Work Step by Step

This is just a basic definition of shortages and surpluses and how they are related to floors and ceilings. This is simple! A price floor example is minimum wage, with minimum wage there is a surplus of workers which causes unemployment.
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