Question 1

The system of taxicab medallions in New York City is an example of a:

Accepted Answer

A) price subsidy. 
B) nonbinding price ceiling. 
C) price floor. 
D) quantity control. 
A) price subsidy. 
B) nonbinding price ceiling. 
C) price floor. 
D) quantity control.

Question 2

If the government sets out to help low-income people by establishing a maximum amount that can be paid for rent:

Accepted Answer

A) a price floor has been set,and a shortage of rental units may occur. 
B) a price ceiling has been set,and a shortage of rental units may occur. 
C) in the long run,more rental units will appear. 
D) the quality of rental units will be inefficiently high. 
A) a price floor has been set,and a shortage of rental units may occur. 
B) a price ceiling has been set,and a shortage of rental units may occur. 
C) in the long run,more rental units will appear. 
D) the quality of rental units will be inefficiently high.

Question 3

A price ceiling is:

Accepted Answer

A) a maximum price sellers are allowed to charge for a good or service. 
B) the difference between the quantity supplied and quantity demanded. 
C) a minimum price buyers are required to pay for a good or service. 
D) the deadweight loss caused by an inefficiently low quantity. 
A) a maximum price sellers are allowed to charge for a good or service. 
B) the difference between the quantity supplied and quantity demanded. 
C) a minimum price buyers are required to pay for a good or service. 
D) the deadweight loss caused by an inefficiently low quantity.

Question 4

Use the following to answer question:  
-(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price _____ at _____,causing a _____ of _____.

Accepted Answer

A) floor;P4;surplus;Q3 - Q0 
B) floor;P2;surplus;Q2 - Q0 
C) ceiling;P4;surplus;Q2 - Q1 
D) floor;P1;shortage;Q3 - Q0 
A) floor;P4;surplus;Q3 - Q0 
B) floor;P2;surplus;Q2 - Q0 
C) ceiling;P4;surplus;Q2 - Q1 
D) floor;P1;shortage;Q3 - Q0

Question 5

Use the following to answer question:  
-(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent3:

Accepted Answer

A) the shortage of rental units is the distance Q3 - Q1. 
B) some renters will be willing to pay a price as high as Rent4 for Q3 units. 
C) no one will have to pay a higher actual price than Rent0,nor will anyone be willing to do so. 
D) rent will remain at Rent2. 
A) the shortage of rental units is the distance Q3 - Q1. 
B) some renters will be willing to pay a price as high as Rent4 for Q3 units. 
C) no one will have to pay a higher actual price than Rent0,nor will anyone be willing to do so. 
D) rent will remain at Rent2.

Question 6

A price control is:

Accepted Answer

A) control of the price of a good by the firm that produces it. 
B) a legal restriction on how high or low a price in a market may go. 
C) an upper limit on the quantity of some good that can be bought or sold. 
D) a tax on the sale of a good that controls the market price. 
A) control of the price of a good by the firm that produces it. 
B) a legal restriction on how high or low a price in a market may go. 
C) an upper limit on the quantity of some good that can be bought or sold. 
D) a tax on the sale of a good that controls the market price.

Question 7

Which inefficiency is NOT caused by binding price ceilings?

Accepted Answer

A) inefficient allocation to consumers 
B) wasted resources 
C) potential illegal activity 
D) inefficient allocation of sales among sellers 
A) inefficient allocation to consumers 
B) wasted resources 
C) potential illegal activity 
D) inefficient allocation of sales among sellers

Question 8

When the government policy is to regulate the quantity of a good that can be bought and sold rather than the price at which it is transacted,it uses a:

Accepted Answer

A) quota. 
B) price control. 
C) price ceiling. 
D) price floor. 
A) quota. 
B) price control. 
C) price ceiling. 
D) price floor.

Question 9

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

Accepted Answer

A) True 
 B)False

Question 10

The dictator of a small country restricts the price of cars to an amount less than or equal to $1,200 (a price below the equilibrium price for cars).Such a policy would set a:

Accepted Answer

A) price floor. 
B) price ceiling. 
C) quota. 
D) tariff. 
A) price floor. 
B) price ceiling. 
C) quota. 
D) tariff.

Question 11

Use the following to answer question:  
-(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.30 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million pounds of butter.

Accepted Answer

A) surplus;4.5 
B) surplus;6.0 
C) shortage;6.0 
D) shortage;4.5 
A) surplus;4.5 
B) surplus;6.0 
C) shortage;6.0 
D) shortage;4.5

Question 12

The government might impose a price ceiling if _____ in a market can make a strong moral or political argument for _____ prices.

Accepted Answer

A) consumers;lower 
B) producers;lower 
C) consumers;higher 
D) producers;higher 
A) consumers;lower 
B) producers;lower 
C) consumers;higher 
D) producers;higher

Question 13

Suppose that a binding price floor is in place in a particular market.If the market is deregulated and the price floor is removed:

Accepted Answer

A) the quantity demanded will decrease. 
B) excess demand will develop. 
C) the quality of the good supplied will likely decrease. 
D) quantity supplied will increase. 
A) the quantity demanded will decrease. 
B) excess demand will develop. 
C) the quality of the good supplied will likely decrease. 
D) quantity supplied will increase.

Question 14

Price controls:

Accepted Answer

A) always increase economic efficiency. 
B) always lead to more equitable results. 
C) can result in inequitable outcomes. 
D) are always set below the equilibrium price. 
A) always increase economic efficiency. 
B) always lead to more equitable results. 
C) can result in inequitable outcomes. 
D) are always set below the equilibrium price.

Question 15

Use the following to answer question:  
-(Table: The Market for Soda)Use Table: The Market for Soda.If the government does NOT impose a price control,the price of a can of soda will equal:

Accepted Answer

A) $0.50. 
B) $0.75. 
C) $1.00. 
D) $1.25. 
A) $0.50. 
B) $0.75. 
C) $1.00. 
D) $1.25.

Question 16

A binding price floor in the market for wheat:

Accepted Answer

A) increases the price paid by consumers. 
B) decreases the price paid by consumers. 
C) decreases the price received by farmers. 
D) does not change the price received by farmers. 
A) increases the price paid by consumers. 
B) decreases the price paid by consumers. 
C) decreases the price received by farmers. 
D) does not change the price received by farmers.

Question 17

The amount for which suppliers are willing to supply the quota limit quantity is the:

Accepted Answer

A) demand price. 
B) supply price. 
C) quota rent. 
D) price floor. 
A) demand price. 
B) supply price. 
C) quota rent. 
D) price floor.

Question 18

A binding price floor is a _____ price set _____ the equilibrium price.

Accepted Answer

A) minimum;at 
B) maximum;below 
C) minimum;above 
D) maximum;above 
A) minimum;at 
B) maximum;below 
C) minimum;above 
D) maximum;above

Question 19

Use the following to answer question:  
-(Figure: Market I)Use Figure: Market I.A price floor at $15 would result in deadweight loss of:

Accepted Answer

A) $9. 
B) $10. 
C) $20. 
D) $40.50. 
A) $9. 
B) $10. 
C) $20. 
D) $40.50.

Question 20

Theoretically,the quota rent for a New York taxicab owner is equal to the market price of the license that allows him to drive the cab.

Accepted Answer

A) True 
 B)False

Exam 5: Price Controls and Quotas: Meddling With Markets

The system of taxicab medallions in New York City is an example of a:

If the government sets out to help low-income people by establishing a maximum amount that can be paid for rent:

A price ceiling is:

Use the following to answer question: -(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price _____ at _____,causing a _____ of _____.

Use the following to answer question: -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent3:

A price control is:

Which inefficiency is NOT caused by binding price ceilings?

When the government policy is to regulate the quantity of a good that can be bought and sold rather than the price at which it is transacted,it uses a:

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

The dictator of a small country restricts the price of cars to an amount less than or equal to $1,200 (a price below the equilibrium price for cars).Such a policy would set a:

Use the following to answer question: -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.30 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million pounds of butter.

The government might impose a price ceiling if _____ in a market can make a strong moral or political argument for _____ prices.

Suppose that a binding price floor is in place in a particular market.If the market is deregulated and the price floor is removed:

Price controls:

Use the following to answer question: -(Table: The Market for Soda)Use Table: The Market for Soda.If the government does NOT impose a price control,the price of a can of soda will equal:

A binding price floor in the market for wheat:

The amount for which suppliers are willing to supply the quota limit quantity is the:

A binding price floor is a _____ price set _____ the equilibrium price.

Use the following to answer question: -(Figure: Market I)Use Figure: Market I.A price floor at $15 would result in deadweight loss of:

Theoretically,the quota rent for a New York taxicab owner is equal to the market price of the license that allows him to drive the cab.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Use the following to answer question: -(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price ___ at _,causing a _ of ___.

Use the following to answer question: -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₃:

Use the following to answer question: -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.30 is imposed on this market,an inefficiency will result in the form of a _ of _ million pounds of butter.

The government might impose a price ceiling if _ in a market can make a strong moral or political argument for _ prices.

A binding price floor is a _ price set _ the equilibrium price.