Exam 4: Price Controls and Quotas: Meddling With Markets

Use the following to answer questions: -(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 _____.

Suppose the NFL wants to give the "common fan" the opportunity to attend the Super Bowl, so it sets Super Bowl prices "low"-let's say they set ticket prices for a regular seat at Super Bowl LI to cost just $400. People who have tickets, however, can turn around and sell them online for $1,500 or more. If there are no transaction costs for fans with tickets to sell them, the true cost to a fan of attending Super Bowl LI is:

The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus:

Economists in general agree that rent controls are:

A persistent shortage may occur if:

Licenses allowing taxis to operate issued by New York City in the 1930s are called medallions.

Use the following to answer questions: -(Table: Market for Apartments) Use Table: Market for Apartments. If a government price ceiling of $600 is imposed on this market, the result will be an inefficiency in the form of a _____ million apartments.

Although they cost more than $200,000 when they were issued in the 1930s, the New York taxicab medallions are relatively inexpensive today, selling for around $3,000.

Suppose the U.S. government imposes a binding quota on the number of Japanese-made cars allowed into the United States. Assuming that Japanese-made cars and U.S.-made cars are substitutes in consumption, we would expect the price of Japanese cars to _____ and the price of U.S.-made cars to _____.

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 $1 per can of soda, the quantity of soda demanded will be _____ cans.

Use the following to answer questions: -(Figure: Price Controls) Use Figure: Price Controls. The consumer surplus lost to a price floor at point b is equal to the area:

The most likely reason that the government implements a price _____ is because it feels the price is too high for _____.

(Figure: The Market for Spanish Textbooks) Use Figure: The Market for Spanish Textbooks. Suppose the government believes the producers of Spanish textbooks are not profitable, and it wants to make sure textbook producers are profitable. It could impose a control called a price _____, and for it to be binding, one possible price would 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 1,000 pounds, the quota rent per pound is:

The National Football League does not license quarterbacks. This means that the free market determines the standards that an aspiring quarterback must achieve.

A maximum price legislated by the government is called:

Price controls encourage black markets because:

Which example is a quantity control?

Suppose the state of Mississippi sets a price floor in the market for cotton. If the floor is set below the market-clearing price of cotton, the floor will cause a surplus of cotton.

If the minimum wage is a binding price floor: