Exam 5: Markets in Action

Consider the market for any agricultural commodity for which there exists a binding output quota and demand is inelastic. Any individual producer has a clear financial incentive to

Consider the following demand and supply schedules for some agricultural commodity. Price Quantity Supplied Quantity Demanded \ 10 300 1100 \ 30 500 900 \ 50 700 700 \ 70 900 500 \ 90 1100 300 \ 110 1300 100 TABLE 5- 2 -Refer to Table 5- 2. Total farmers' income under the free- market equilibrium is

In a competitive market, a legal price ceiling set above the free- market equilibrium price will result in

A minimum permissible price established by the government is called

The diagram below shows the market for litres of milk. FIGURE 5- 8 -Refer to Figure 5- 8. Suppose that a binding output quota is imposed on this market at quantity Q1. The loss in economic surplus due to the quota is equal to

The diagram below shows the market for apartments in a city. Assume that all apartments are identical. FIGURE 5- 4 -Refer to Figure 5- 4. Suppose the government imposes a rent- controlled price of $600 per month on apartments in this city. In the long run we can expect the shortage of apartments to be _ units.

$\text { Demand and Supply Schedules for Chocolate Bars }$ $\begin{array}{|c|c|c|}\hline \begin{array}{c}\text { Price } \\(\$)\end{array} & \begin{array}{c}\text { Quantity Demanded } \\\text { (thousandsperweek) }\end{array} & \begin{array}{c}\text { Quantity Supplied } \\\text { (thousands per week) }\end{array} \\\hline 2.00 & 1500 & 2100 \\\hline 1.80 & 1600 & 2050 \\\hline 1.60 & 1700 & 2000 \\\hline 1.40 & 1800 & 1950 \\\hline 1.20 & 1900 & 1900 \\\hline 1.00 & 2000 & 1850 \\\hline 0.80 & 2100 & 1800 \\\hline 0.60 & 2200 & 1750 \\\hline 0.40 & 2300 & 1700 \\\hline\end{array}$ $\text { TABLE 5-1 }$ -Refer to Table 5- 1. Suppose the government imposed a price of $1.80 per chocolate bar. A likely result from this policy is

FIGURE 5- 2 -Refer to Figure 5- 2. A price ceiling set at a price of $2.50 per unit will result in

A binding price floor is a

The diagram below shows the market for litres of milk. FIGURE 5- 8 -Refer to Figure 5- 8. After the imposition of a milk quota at quantity Q1, economic surplus is represented by

Suppose the government establishes a binding price floor for some product. At the price floor,

In a market where we observe a disequilibrium, quantity exchanged is determined

The likely consequence of a binding minimum wage in a competitive labour market is

If the government fixes the price of good X above its free- market equilibrium level, we should expect

Suppose that the free- market equilibrium price of natural gas would be $2.00 per unit, but to protect consumers the government has fixed the price at $1.50. At this ceiling price the quantity Will be greater than the quantity _, resulting in a _ of natural gas.

If the government imposes a price ceiling on rental housing that is below the market- clearing price, the resulting shortage will be

The surpluses associated with a binding price floor will be the smallest when

FIGURE 5- 2 -Refer to Figure 5- 2. A price ceiling set at a price of $1.00 per unit will result in

The diagram below shows the market for apartments in a city. Assume that all apartments are identical. FIGURE 5- 4 -Refer to Figure 5- 4. Suppose the government sets a rent ceiling at Price B, $900. In this situation, if all apartments are rented on the black market, then the rent for an apartment is

Government price controls are policies that attempt to maintain the