1. Chapter 3 Government Control of Prices in Mixed Systems: What Are the Actual Outcomes? Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. 3-2 Price Controls Price Ceilings Price Floors

3. 3-3 S S D D A B Rent Control Rent per unit $ Quantity (thousands of units per year) 500 400 81011 600

4. 3-4 S S Rent Control Rent per unit $ Quantity (thousands of units per year) 500 10 11 D D 600 800 S1S1 S1S1 12.5 525 13 D1D1 D1D1

5. Minimum Wages - Market Demand for Labor Wage rate ($)D D 4.00 3.50 3.00 2.50 2.00 1.50 1.00.50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (Quantity (thousands of hours per week) 3-5

6. The Demand for Labor by One Employer (1)(2)(3)(4)(5) Units of Labor Total Production Marginal Product Marginal Revenue Marginal Revenue Product MRP = (3) x (4) 00 155$.50$2.50 22520$.5010.00 35025$.5012.50 47020$.5010.00 58010$.505.00 6855$.502.50 7861$.50.50 3-6

7. 3-7 The Demand for Labor by One Employer Quantity of Labor 1234567 2.50 5.00 10.00 12.50.50

8. 3-8 Market Supply of Labor Wage rate ($) S S Substitution Effect Income Effect 4.00 3.50 3.00 2.50 2.00 1.50 1.00.50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Quantity (thousands of hours per week)

9. 3-9 Effects of the Minimum Wage Quantity (thousands of hours per week) Wage rate ($)D D S S 9 5.00 6.00 8.59.25

10. 3-10 Alternative Analysis of the Minimum Wage Quantity (thousands of hours per week) Wage rate ($)D D S S 9 5.00 6.00