Exam 4: Extensions of Demand and Supply Analysis

Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?

The economy is undergoing a recession that has reduced consumers' incomes. In the computer chip market, this will lead to

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when

When supply and demand for a product decrease simultaneously, we

A price ceiling set below the market clearing price will tend to cause which of the following?

Suppose a price ceiling is currently set below the equilibrium price. Now suppose that policy makers decide to lower the price ceiling. This reduction in the price ceiling will cause which of the following to occur?

Governments may intervene in private markets through

A price ceiling represents

If the government should decide to legalize marijuana, all other things remaining the same, we should expect to see

What are transaction costs? What are some ways in which society reduces transaction costs?

Voluntary exchange

-Refer to the above figure. If a price floor of $5 was set,

A price ceiling below the market clearing price results in I. excess quantity demand II. excess quantity supplied III. entry of new producers

Assume that the market clearing price for a shirt is $20, but that the maximum price that can be charged is $15. This is an example of

A price ceiling is

If demand increases while supply simultaneously decreases, then the equilibrium quantity

The publication Consumer Reports reduces transaction costs on many purchases by

One effect of a minimum wage in the market for low-skilled labor is

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will increase when

Transaction costs are