Exam 5: Price Controls and Quotas: Meddling With Markets

Use the following to answer question: Figure: Quantity Controls -(Figure: Quantity Controls) Look at the figure Quantity Controls. If the government decides to restrict the quantity sold to 100, which of the following is FALSE?

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

In New York City there are more than 100,000 licensed taxicabs.

Price controls encourage black markets because:

Use the following to answer questions: Table: The Market for Taxi Rides -(Table: The Market for Taxi Rides) Look at the table The Market for Taxi Rides. If a government quota limit at 7 million rides is imposed on this market, the quota rent that will accrue to the owner of a taxi medallion will be _____ per ride, but there will be a total missed opportunity (inefficiency) to consumers and producers of _____ million rides.

Use the following to answer questions: Figure: Market I -(Figure: Market I) Look at the figure Market I. A surplus of the good will result if the price is:

Use the following to answer questions: Figure: The Shrimp Market -(Figure: The Shrimp Market) Look at the 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 difference between the demand price and the supply price at the quota limit amount is the:

Use the following to answer question: Figure: Price Controls -(Figure: Price Control) Look at the figure Price Controls. A price ceiling has been imposed at point d. Identify the areas that correspond to the consumer surplus, producer surplus, and deadweight loss with this price control. In addition, identify the area representing lost producer surplus that has been transferred to consumers as a result of this policy.

Use the following to answer questions: -(Table: Quantity Supplied and Quantity Demanded) Look at the table Quantity Supplied and Quantity Demanded. A government-imposed price ceiling equal to $5 would result in:

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 question: Figure: Price Control -(Figure: Price Control) Look at the figure Price Control. One effective price ceiling would be the price indicated at point _____, and there would be a _____ equal to the difference between points _____.

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

Use the following to answer questions: Table: The Market for Taxi Rides -(Table: The Market for Taxi Rides) Look at the table The Market for Taxi Rides. If a government quota limit at 9 million rides is imposed, the quota rent that will accrue to the owner of a taxi medallion will be _____ per ride, but there will be a total missed opportunity (inefficiency) to consumers and producers of _____ million rides.

A binding price ceiling will cause a persistent _____, and a binding price floor will cause a persistent _____.

The likely result of a price floor is a _____ of the good at a price _____ the equilibrium price.

Use the following to answer questions: Figure: The Market for Butter -(Figure: The Market for Butter) Look at the figure The Market for Butter. If a government price floor at $1.20 is imposed on this market, an inefficiency will result in the form of a _____ of _____ million pounds of butter.

Use the following to answer questions: Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are imposed and the government wants them to be immediately effective, they will most likely be set at either _____ or _____.

A price ceiling on a good often results in:

Assuming that U.S. and French wines are substitutes in consumption, if the U.S. government imposes a quota on the amount of French wine allowed into the United States and the quota is set at a quantity below equilibrium, the price of French wine in the United States will _____ while the price of the U.S.-produced wine will _____.