Task: Government Price Controls
Answer the following questions fully and clearly. Be sure to explain why you answered as you did, stating the logical reasons for reaching your conclusions.
Question 1. There are federal and state laws setting minimum wages for workers. There are also city laws setting price ceilings for housing rents.
a. Why are there laws setting minimum wages for workers and maximum rents for housing?
b. Why are there no laws setting maximum wages for workers or minimum rents for housing?
Question 2. It has been stated that price controls cause shortages or surpluses.
a. Do rent controls cause shortages or surpluses, and why?
b. Do minimum wage laws cause shortages or surpluses, and why?
Question 3. What are the advantages and disadvantages of minimum wage laws for:
a. Workers?
b. Employers?
c. Consumers?
d. If minimum wage laws are beneficial, why are minimum wages set as low as they are – for example, what about a minimum wage rate of $100 per hour?
e. If rent controls are beneficial, why are rent ceilings set as high as they are – for example, what about a rent ceiling of $100 per month for every rent-controlled dwelling?
Question 4. From the questions and answers above, what do you conclude in general about the advantages and disadvantages of price control laws that set price ceilings and price floors for any and all goods and services?