1)

In 2007,the government attempted to end inflation by enforcing a price freeze on basic commodities such as corn, sugar and eggs. This led to runs on grocery stores and other places that sold such items, since in some cases the prices were rolled back to almost 50% of what they had been. A shortage occurred because people rushed to stock up on these items as much as they could.

In this example, the freeze on prices is known as a government enforced __________, with businesses forbidden to charge more than the price set by the government. These government enforced price constraints are binding because they are lower than the __________.

• a.) price ceiling; price floor
• b.) price ceiling;equilibrium price
• c.) price floor; equilibrium price
• d.) price floor; price ceiling

2)

What happens on a graph for a good when a tax is imposed?

• a.) The demand curve shifts to the left.
• b.) The supply curve shifts to the right
• c.) The supply curve shifts to the left.
• d.) The demand curve shifts to the right.