Sam is known to be the fastest worker in the mail room. he has worked in the mail room for only a short time, but prides himself on being competent and a quick learner. he often gets positive comments from coworkers and his boss, which to motivate him and has a positive effect as he continues to challenge himself at work. as a result of his efficient style, he is also given more freedom than other workers, as his boss is impressed by his ability to sort and organize mail. sam is likely to be motivated as he continues to challenge and push himself to perform even better each day.

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale