Power plants in the China encompass run short of the coal, an inadvertent outcome of government-mandated price controls-a throw-back to communist central planning to shield the public from rising global energy costs. Beijing has also frozen retail prices of the gasoline and diesel. Oil refiners state that they are suffering deep losses and some start cutting production last year, causing the fuel scarcities in parts of China’s south.

CNN, May 20, 2008

Q1. Are China’s price controls describeed in the news clipped a price floor or a price ceiling?

Q2. On a graph, show and describe how China’s price controls have made a shortage or a excess in the markets for petrol, coal and diesel.

Q3. Show on a graph and describe how China’s price controls have modified the consumer surplus, producer surplus and deadweight loss in the markets for petrol, coal and diesel.

The US Farm Bill 2012 points out that the domestic price of wheat will be maintained at above the market equilibrium level in order to support for the domestic wheat growers.

Q4. Is the wheat price control in US a price floor or a price ceiling?

Q5. On a graph, show and describe if the price control in the US makes a shortage or an excess in the market for wheat. Suppose that the US doesn’t trade wheat internationally.

Q6. Show on a graph and describe how the price control in the US modifies consumer surplus, producer surplus and deadweight loss in the domestic wheat market.