Exam 6: Price Ceilings and Price Floors

A price ceiling is typically imposed on a market because of ___________ and it creates_______.

The "story of agriculture" in the United States is one of

U.S. law requires that parity price ratios be maintained at 100 percent.

Prior to the 1996 Summer Olympics in Atlanta, Georgia, the city passed legislation that effectively prevented hotels from increasing their rates during the games. Describe the effects of this legislation on the market for hotel rooms during the games.

Setting concert ticket prices below their market clearing level replaces monetary with nonmonetary costs.

A major justification for the use of price floors in agriculture was that

Here's a rather specific question concerning U.S. historical agricultural data. Which of the following increased fivefold from 1950 to 1980?

Suppose that nurses' salaries are set at a guaranteed minimum. We would expect all of the following to be true except

A government policy to improve farm incomes by supporting agricultural prices at a level above equilibrium will reduce consumer's surplus

What situation best explains why the government would impose price ceilings?

Certain religious texts prohibit charging interest to people who borrow. This is a form of

Agriculture's share of total output in the U.S. has declined throughout the 20th century, although the absolute value of farm output has increased. The number of U.S. farms grew in the early part of the century, then began to steadily fall. The number of U.S. farms peaked in which of the following decades?

Because nothing in life is free, the cost of a price ceiling program is chronic excess supply.

One way to allocate 1,000 (stadium capacity) football tickets priced at $20 to 2,000 would-be buyers is to

David sells Sno-cones and uses the money earned to buy pizzas. Last year Sno-cones sold for $1 each, andpizzas were $10 each. This year David finds that he can only charge $0.50 per Sno-cone, but that the priceof a pizza has climbed to $12. a. If David asks the government to intervene to maintain his purchasing power, what price would the government have to set for Sno-cones? Explain. b. How would the new, government-imposed Sno-cone price affect the Sno-cone market?

Government intervention in the marketplace for the purpose of influencing prices should be done whenever the opportunity cost of such actions falls to zero.

If Sam, a farmer in 1963, finds that he needs two bushels of corn to buy what his grandfather bought with one bushel during the 1910-1914 benchmark period, then

A market consequence of a price floor is that

If a surplus accumulates as the result of agricultural support prices, the government must buy it; otherwise the support price cannot be maintained.

Price ceilings and floors have traditionally been used when