Exam 4: Price Controls and Quotas: Meddling With Markets

Use the following to answer questions: -(Table: Market for Fried Twinkies) Use Table: Market for Fried Twinkies. Suppose the government decides to reduce fried Twinkie consumption as part of a war on obesity. After careful study, the government decides to impose a quota of 5,000 on production of fried Twinkies this year. What price will producers charge if they obey the quota law?

The persistent unwanted surplus that results from a binding price floor causes inefficiencies that do NOT include:

(Figure: Supply and Demand) Use Figure: Supply and Demand. A binding price floor is represented by:

A price ceiling will have NO immediate effect if:

Use the following to answer questions: -(Figure: Supply and Demand) Use Figure: Supply and Demand. A binding price ceiling is represented by:

By definition, in a black market, goods or services are bought and sold:

Use the following to answer question 24: -(Table: Market for Fried Twinkies) Use Table: Market for Fried Twinkies. In response to popular anger over the high price of fried Twinkies and the extreme wealth of fried Twinkie producers, the government imposes a price ceiling of $1.20 per fried Twinkie. From this table, the price ceiling causes a _____ fried Twinkies.

(Table: Market for Butter) Use Table: Market for Butter. If the government imposes a price ceiling of $0.90 per pound of butter, the quantity of butter actually purchased will be _____ million pounds.

Which example is a quota?

Suppose the United States removes its sugar quotas and the market price of sugar drops. Since sugar is an input in candy, in the candy bar market, we would expect consumer surplus to:

Rent controls in New York City do NOT cause:

Use the following to answer questions: -(Figure: The Market for Economics Textbooks) Use Figure: The Market for Economics Textbooks. Suppose the government believes textbooks are too expensive and it wants to make sure textbooks are affordable to more students. This type of price control is called a price _____, and one possible binding price control would be _____.

The government decides to impose a price ceiling on a good because it thinks the market-determined price is too high. If the government imposes the price ceiling below the equilibrium price:

(Figure: Price Control) Use Figure: Price Control. One effective price ceiling would be the price indicated at point _____, and there would be a _____ equal to the difference between points _____.

Typically, the government limits the quantity of a good that can be bought and sold by:

The upper limit on the quantity of a good that can be bought and sold is the:

Use the following to answer questions: -(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.

Use the following to answer questions: -(Figure: Rent Controls) Use Figure: Rent Controls. Without rent controls, the equilibrium quantity is:

Use the following to answer questions: -(Table: The Market for Soda) Use Table: The Market for Soda. If the government imposes a price ceiling of $0.50 per can of soda, there will be:

Use the following to answer questions: -(Figure: The Shrimp Market) Use Figure: The Shrimp Market. If the government imposes a quota limiting sales of shrimp to 250 pounds, it will have the same effect on transactions as a price floor of: