Question 1

Government intervention in the form of price floors or price ceilings will:

Accepted Answer

A) always enhance the efficiency of the market. 
B) result in either surpluses or shortages. 
C) move the market toward its equilibrium quantity more quickly. 
D) often be seen as necessary to decrease the existence of black markets. 
A) always enhance the efficiency of the market. 
B) result in either surpluses or shortages. 
C) move the market toward its equilibrium quantity more quickly. 
D) often be seen as necessary to decrease the existence of black markets.

Question 2

How do price ceilings create so-called black markets?

Accepted Answer

Answer
A price ceiling creates a shortag

Question 3

A persistent shortage may occur if:
A.the government imposes a price ceiling.
B.the government imposes a price floor.
C.demand keeps falling.
D.supply shifts rightward.

Accepted Answer

the govern

Question 4

Suppose the United States removes the current sugar quotas and the market price of sugar drops.In the candy bar market, we would expect consumer surplus to:
A.increase.
B.decrease.
C.not change.
D.Consumer surplus cannot be determined without information about the supply curve.

Accepted Answer

The answer of Suppose the United States removes the current...

Question 5

A maximum price set below the equilibrium price is a:
A.demand price.
B.supply price.
C.price floor.
D.price ceiling.

Accepted Answer

The answer of A maximum price set below the equilibrium...

Question 6

Figure: The Market for Tortillas
     (Figure: The Market for Tortillas) Look at the figure The Market for Tortillas.If there is a nonbinding price floor in the market for tortillas, the price could be equal to , where
consumers would demand ________, and producers would supply _. 
A.P₁; Q₁; Q₃
B.P₂; Q₂; Q₂
C.P₁; Q₃; Q₁
D.P₃; Q₂; Q₁

Accepted Answer

The answer of Figure: The Market for Tortillas
  ...

Question 7

How is a quota limit different from or similar to a price control?

Accepted Answer

Answer
The primary difference between th

Question 8

Figure: Price Controls
     (Figure: Price Control) Look at the graph Price Controls.The consumer surplus lost due to a price floor at point b is equal to the area: 
A.abe.
B.egh.
C.bcge.
D.bcke.

Accepted Answer

The answer of Figure: Price Controls
    ...

Question 9

A price ceiling is not effective if:
A.it is set above the equilibrium price.
B.the equilibrium price is above the price ceiling.
C.it is set below the equilibrium price.
D.it creates a shortage.

Accepted Answer

it is set

Question 10

A price control is:
A.when a firm controls the price of the good it produces.
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 placed on the sale of a good which controls the market price.

Accepted Answer

a legal restriction

Question 11

When transatlantic airfares were set artificially high by an international treaty, airlines offered customers an inefficiently high quality of service.

Accepted Answer

A) True 
 B)False

Question 12

Suppose the market price of wheat is $7 a bushel and a price ceiling is set at $9 a bushel.What is the impact of this price ceiling?

Accepted Answer

Answer
This is an example of an ineffect

Question 13

Which is not an inefficiency caused by price ceilings?
A.inefficient allocation to consumers
B.wasted resources
C.illegal activity
D.inefficient allocation of sales among sellers

Accepted Answer

inefficien

Question 14

(Table: The Market for Acupuncture) Look at the table The Market for Acupuncture.In an effort to regulate this market, the town requires each acupuncture therapist to purchase a license.Initially the government issues only enough licenses to provide for 20 treatments per month.Suppose this quota is in place for many years and, over time, the population of the town has substantially grown.This change could result in:
A.larger quota rents and more deadweight loss as the demand curve shifted to the left.
B.larger quota rents and less deadweight loss as the supply curve shifted to the right.
C.larger quota rents and more deadweight loss as the demand curve shifted to the right.
D.smaller quota rents and more deadweight loss as the demand curve shifted to the right.

Accepted Answer

larger quota rents a

Question 15

Rent controls usually set a price ceiling below the equilibrium price and therefore:

Accepted Answer

A) quantity supplied exceeds the quantity demanded. 
B) quantity demanded exceeds the quantity supplied. 
C) a surplus of rental units will result. 
D) all low-income recipients will clearly be helped. 
A) quantity supplied exceeds the quantity demanded. 
B) quantity demanded exceeds the quantity supplied. 
C) a surplus of rental units will result. 
D) all low-income recipients will clearly be helped.

Question 16

If the government feels that a price in the market is too high for , it can impose a
________.
A.consumers; price ceiling
B.consumers; price floor
C.producers; price ceiling
D.producers; price floor

Accepted Answer

consumers;

Question 17

(Table: The Market for Soda) Look at the table The Market for Soda.If the government does not impose a price control, the price of a can of soda will equal: 
A.$0.50.
B.$0.75.
C.$1.00.
D.$1.25.

Accepted Answer

The answer of   (Table: The Market for Soda)...

Question 18

Price controls are always set below the market equilibrium price.

Accepted Answer

A) True 
 B)False

Question 19

(Figure: Rent Controls) Look at the figure Rent Controls.If rent controls are set at Rent0:

Accepted Answer

A) the shortage of rental units is the distance Q₁ - Q₃. 
B) some renters would be willing to pay a price as high as Rent4 for Q0 units. 
C) no one would have to pay a higher actual price than Rent0, nor would anyone be willing to do so. 
D) there would be a surplus of rental units. 
A) the shortage of rental units is the distance Q₁ - Q₃. 
B) some renters would be willing to pay a price as high as Rent4 for Q0 units. 
C) no one would have to pay a higher actual price than Rent0, nor would anyone be willing to do so. 
D) there would be a surplus of rental units.

Question 20

Table: The Market for Taxi Rides
     (Table: Market for Taxi Rides) Look at the table The Market for Taxi Rides.If a government quota limit at 9 million rides is imposed on this market, the quota rent that will accrue to the owner of a taxi medallion will be , but there will be a missed opportunity
(inefficiency) to consumers of _. 
A.$1 per ride; 1 million rides
B.$2 per ride; 2 million rides
C.$3 per ride; 3 million rides
D.$4 per ride; 4 million rides

Accepted Answer

$1 per rid

Government intervention in the form of price floors or price ceilings will:

How do price ceilings create so-called black markets?

A persistent shortage may occur if: A.the government imposes a price ceiling. B.the government imposes a price floor. C.demand keeps falling. D.supply shifts rightward.

Suppose the United States removes the current sugar quotas and the market price of sugar drops.In the candy bar market, we would expect consumer surplus to: A.increase. B.decrease. C.not change. D.Consumer surplus cannot be determined without information about the supply curve.

A maximum price set below the equilibrium price is a: A.demand price. B.supply price. C.price floor. D.price ceiling.

How is a quota limit different from or similar to a price control?

Figure: Price Controls (Figure: Price Control) Look at the graph Price Controls.The consumer surplus lost due to a price floor at point b is equal to the area: A.abe. B.egh. C.bcge. D.bcke.

A price ceiling is not effective if: A.it is set above the equilibrium price. B.the equilibrium price is above the price ceiling. C.it is set below the equilibrium price. D.it creates a shortage.

A price control is: A.when a firm controls the price of the good it produces. 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 placed on the sale of a good which controls the market price.

When transatlantic airfares were set artificially high by an international treaty, airlines offered customers an inefficiently high quality of service.

Suppose the market price of wheat is $7 a bushel and a price ceiling is set at $9 a bushel.What is the impact of this price ceiling?

Which is not an inefficiency caused by price ceilings? A.inefficient allocation to consumers B.wasted resources C.illegal activity D.inefficient allocation of sales among sellers

Rent controls usually set a price ceiling below the equilibrium price and therefore:

If the government feels that a price in the market is too high for , it can impose a ________. A.consumers; price ceiling B.consumers; price floor C.producers; price ceiling D.producers; price floor

(Table: The Market for Soda) Look at the table The Market for Soda.If the government does not impose a price control, the price of a can of soda will equal: A.$0.50. B.$0.75. C.$1.00. D.$1.25.

Price controls are always set below the market equilibrium price.

(Figure: Rent Controls) Look at the figure Rent Controls.If rent controls are set at Rent0:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

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

Filters

Exam 5: Price Controls and Quotas: Meddling With Markets

Government intervention in the form of price floors or price ceilings will:

How do price ceilings create so-called black markets?

A persistent shortage may occur if: A.the government imposes a price ceiling. B.the government imposes a price floor. C.demand keeps falling. D.supply shifts rightward.

Suppose the United States removes the current sugar quotas and the market price of sugar drops.In the candy bar market, we would expect consumer surplus to: A.increase. B.decrease. C.not change. D.Consumer surplus cannot be determined without information about the supply curve.

A maximum price set below the equilibrium price is a: A.demand price. B.supply price. C.price floor. D.price ceiling.

How is a quota limit different from or similar to a price control?

Figure: Price Controls (Figure: Price Control) Look at the graph Price Controls.The consumer surplus lost due to a price floor at point b is equal to the area: A.abe. B.egh. C.bcge. D.bcke.

A price ceiling is not effective if: A.it is set above the equilibrium price. B.the equilibrium price is above the price ceiling. C.it is set below the equilibrium price. D.it creates a shortage.

A price control is: A.when a firm controls the price of the good it produces. 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 placed on the sale of a good which controls the market price.

When transatlantic airfares were set artificially high by an international treaty, airlines offered customers an inefficiently high quality of service.

Suppose the market price of wheat is $7 a bushel and a price ceiling is set at $9 a bushel.What is the impact of this price ceiling?

Which is not an inefficiency caused by price ceilings? A.inefficient allocation to consumers B.wasted resources C.illegal activity D.inefficient allocation of sales among sellers

Rent controls usually set a price ceiling below the equilibrium price and therefore:

If the government feels that a price in the market is too high for , it can impose a ________. A.consumers; price ceiling B.consumers; price floor C.producers; price ceiling D.producers; price floor

(Table: The Market for Soda) Look at the table The Market for Soda.If the government does not impose a price control, the price of a can of soda will equal: A.$0.50. B.$0.75. C.$1.00. D.$1.25.

Price controls are always set below the market equilibrium price.

(Figure: Rent Controls) Look at the figure Rent Controls.If rent controls are set at Rent0:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

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

Filters