Determine whether each of the following statements is an example of a price ceiling or a price floor and whether it is binding or nonbinding. a. The government prohibits fast-food restaurants from selling hamburgers for more than $8 each.
b. Due to new regulations, fast-food restaurants that would like to pay better wages in order to hire more workers are prohibited from doing so.
c. The government has instituted a legal minimum price of $5 each for hamburgers.

price ceiling non binding

price ceiling binding

price floor non-binding

Explanation:

A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.

the minimum price for hamburgers is $5. this is an example of a price floor

Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.

The government sets the maximum price for hamburgers. this is an example of a price ceiling

Restaurants are prevented from hiring more workers and paying them a better wage. this is an example of a binding price ceiling

Effects of a price ceiling

1.It leads to shortages

2.it leads to the development of black markets

3.it prevents producers from raising price beyond a certain price

4.It lowers the price consumers pay for a product. This increases consumer surplus

First lets  start off with relative change. Relative changes shows the change of a value of an indicator in the first period and in percentage terms, ext. Relative change is calculated by subtracting the value of the indicator in the first period from the value of the indicator in the second period which is then divided by the value of the indicator in the first period and the result is taken out in percentage terms.  The formula for relative change is very simple, and it is derived by initially deducting the initial value of the variable from the final value, then dividing the result by the initial value, and then finally multiplying by 100% to express in terms of percentage. Also

Explanation:

A small example in  relative prices is  In apple season, apples cost half as much as oranges. In orange season, oranges cost half as much as apples. Also to understand better, either market forces or government intervention, the relative price of goods and services does impact the allocation of resources used to produce these goods and services. A relative price is the price of one good compared to another. Resource allocation addresses how land, capital, and labor are spent in the production of goods and services. Since we went over that relative price is the price of something compared to something else. In other words, it is the ratio of two prices. Completely logical people will make purchasing decisions by considering the relative prices of their options. We can conclude that gas is $2.76 compared to the $3.02 of diesel . Now the gas is $0.26 cents cheaper than diesel. This is caused by the price to refine diesel compared to gas. Now that we have two simple example to show the basis of relative prices, you can clearly see the mean and definition of relative prices  through the examples shown!