Exam 5: Price Controls and Quotas: Meddling With Markets

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

To be binding, a price ceiling must be set at a price:

Which is NOT a correct statement about the undesirable side effects of a quantity control?

If the minimum wage is a binding price floor:

A price control is:

A student organization is formed on your college campus to protest against the high rent for apartments near campus. This organization is planning a meeting with the dean and president of the college. Which of the following best describes the policy the student organization will fight for?

A binding price floor is a _____ set _____ the equilibrium price.

Use the following to answer questions: Figure: The Market for Sandwiches -(Figure: The Market for Sandwiches) Look again at the figure The Market for Sandwiches. How much total surplus would be lost if there were a quota of eight sandwiches that could be legally exchanged at a price of $5?

The market for salmon is in equilibrium. A price ceiling, a price floor, and a quota limit in this market would all cause:

If the state of Minnesota established a price floor in the market for pumpkins that was double the current market-clearing price, this would lead to an inefficient number of pumpkins sold in Minnesota.

Which of the following is an example of a black market transaction?

The Atlanta Symphony wants to make sure that its concerts are affordable for all residents of Atlanta and therefore prices all of its tickets at $25. However, outside Symphony Hall, people can sell the same tickets for $75 or more. The true cost to the concertgoer of a ticket to the symphony is at least:

West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States:

Quotas are more effective than price controls because unlike price controls, quotas do not cause deadweight loss.

A binding minimum wage will generally cause increased unemployment for low-skilled workers.

When the minimum wage increases:

Hugo Chávez was the president of Venezuela. Venezuela is a major producer of oil products, which remain the keystone of Venezuela's economy. Suppose President Chávez wanted to increase his popularity with the citizens of Venezuela and enacted a government policy to reduce the price of gasoline sold at state-owned gas stations to 50% of the previous price. Assuming a downward-sloping demand curve for gasoline, in theory, this policy would result in the quantity of gasoline demanded to be _____ the quantity of gasoline supplied.

If minimum wages are set above the equilibrium wage in the market, then the number of workers hired will be _____ the number of people who are willing to work.

A price ceiling is likely to result in a persistent _____, a transfer of surplus from _____, and _____ deadweight loss.

If the demand curve for clams is downward-sloping and the supply curve is upward-sloping, a quota that is set above the equilibrium quantity will have no effect on the market.