Part 1. Shortages or surpluses are created when the price is below or above the market equilibrium price. These shortages and surpluses can be cleared on their own (through the invisible hand) or persist and present binding constraints. Explain when a shortage cannot be eliminated in the market. Explain when a surplus cannot be eliminated in the market. Part 2. Do minimum wage laws create a shortage or surplus in the labor market for low-skilled workers (those who do not have the education, training, or experience to obtain higher-paying jobs, such as teenagers)? State some of the intentions for implementing minimum wage laws. State at least two economic or social problems that minimum wage creates. Part 3. Do rent controls create a shortage or surplus that cannot be eliminated, thus presenting a binding constraint in the rental apartment market? State some of the intentions for implementing a rent ceiling. State at least two economic or social problems that a rent ceiling creates..

1. Part 1. Shortages or surpluses are created when the price is below or above the market
equilibrium price. These shortages and surpluses can be cleared on their own (through the
invisible hand) or persist and present binding constraints. Explain when a shortage cannot be
eliminated in the market. Explain when a surplus cannot be eliminated in the market.
Part 2. Do minimum wage laws create a shortage or surplus in the labor market for low-skilled
workers (those who do not have the education, training, or experience to obtain higher-paying
jobs, such as teenagers)? State some of the intentions for implementing minimum wage laws.
State at least two economic or social problems that minimum wage creates.
Part 3. Do rent controls create a shortage or surplus that cannot be eliminated, thus presenting a
binding constraint in the rental apartment market? State some of the intentions for implementing
a rent ceiling. State at least two economic or social problems that a rent ceiling creates.