Exam 5: Price Controls and Quotas: Meddling With Markets

Which of the following is a likely outcome of price controls and quota limits?

Suppose Congress imposes a price ceiling of $5 per ATM transaction.If the average market- clearing price for an ATM transaction is $2, the price ceiling will not be binding in this instance.

Figure: The Market for Economics Textbooks (Figure: The Market for Economics Textbooks) Look at the figure The Market for Economics Textbooks.At a price ceiling of $40 in the market, the market outcome would be: A.a surplus of 30 textbooks. B.a surplus of 10 textbooks. C.a shortage of 30 textbooks. D.a shortage of 10 textbooks.

The system of taxicab medallions in New York City is an example of a A.price ceiling. B.nonbinding price ceiling. C.price floor. D.quantity control.

One of the consequences of the minimum wage has been:

One of the ways rent control is inefficient is that it leads to:

The difference between the demand price and the supply price at the quota limit is: A.the quota rent. B.the rent received by landlords who own rent-controlled apartments. C.the opportunity cost of using or buying a good, subject to an import quota. D.usually large enough to cause a surplus.

(Table: Quantity Supplied and Quantity Demanded) Look at the table Quantity Supplied and Quantity Demanded.The government institutes a price control and as a result too many resources are allocated for the production of a good.The price control in this market must be equal to: A.$5. B.$10. C.$15. D.$20.

A price ceiling on a good often results in: A.black market or underground transactions of the good. B.a surplus of the product. C.greater communications between buyers and sellers about the appropriate price. D.a more efficient allocation of the good to buyers.

The government decides to impose a price ceiling on a good because it thinks the market- determined price is "too high." If it imposes the price ceiling above the equilibrium price: A.consumers will respond to the higher price and therefore wish to purchase less of the good than at the equilibrium price. B.producers will respond to the higher price and therefore offer fewer units for sale. C.consumers will purchase less of the good after the price ceiling is imposed. D.neither producers nor consumers will change their behavior.

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

(Table: The Market for Hamburger Flippers) Look at the table The Market for Hamburger Flippers.If the minimum wage in this market is $8, what is the impact on the market? Who are the winners and losers of the minimum wage?

(Table: Market for Fried Twinkies) Look at the table Market for Fried Twinkies.Using the table, if the government imposes a quota on the fried Twinkie market of 5,000, the quota rent (per fried Twinkie) collected by the fried Twinkie producers will be: A.$1.20. B.$0.30. C.$1.50. D.$1.00.

Figure: The Market for Spanish Textbooks (Figure: The Market for Spanish Textbooks) Look at the 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 price control called a ________ and, to be binding, one possible price would be _. A.price floor; $90 B.price floor; $40 C.price ceiling; $40 D.price ceiling; $90

The likely result of a price floor is: A.a surplus of the good at a price above the market equilibrium price. B.a shortage of the good at a price below the market equilibrium price. C.a surplus of the good at a price below the market equilibrium price. D.a shortage of the good at a price above the market equilibrium price.

(Figure: Rent Controls) Look at the figure Rent Controls.Without rent controls, the equilibrium rent is _ . A.Rent4 B.Rent1 C.Rent2 D.Rent3

The market for salmon is in equilibrium.A price ceiling, a price floor, and a quota limit in this market would all have which outcome in common? A.deadweight loss created by a quantity exchanged that is less than the equilibrium quantity B.a supply price that exceeds a demand price C.revenue collected by the government on each unit of salmon harvested D.deadweight loss created by a transfer of surplus from consumers to producers

Which of the following is a reason for governments imposing or maintaining price controls? A.Some consumers and producers can benefit from price controls. B.Price controls recapture the deadweight loss of equilibrium. C.The government benefits from price controls. D.Price controls improve the efficiency of the market.

An effective minimum wage ultimately means that: A.some unskilled workers may have a difficult time finding a job. B.employers must encourage workers to apply for positions. C.employers will have difficulty finding enough workers for their positions. D.employees are generally guaranteed employment.

The market for apples is in equilibrium at a price of $0.50 per pound.If the government imposes a price floor in the market at a price of $0.40 per pound, then: A.quantity demanded will decrease. B.quantity supplied will increase. C.there will be a shortage of the good. D.the price floor will not affect the market price or output.