Exam 4: Price Controls

Use the following table to answer the next two questions. -The government has imposed a price control for many agricultural products in an effort to support farmers.In the case of price floor P₂ in the accompanying figure,how much of a disequilibrium in quantity exists?

Suppose you live in a community with no price controls.What do you expect to happen if your town borders a community where there is a nonbinding price floor on most products?

Who potentially benefits from a price floor?

If a store sells a good at the market price,even though the government authorities have set the maximum price that can be charged for it,the store is selling the good in a(n):

If you were a politician,why would you find it difficult to remove a binding price ceiling?

Imagine you find yourself in a heat wave and your air conditioner has broken.Unable to find a new one at the store because of a price gouging law,you purchase an air conditioner on the black market.What role did the price gouging law have?

Use the following information to answer the next two questions. Market for flat-screen TVs: Demand: Q_d = 2,600 - 5 P Supply: Q_s = -1,000 + 10 P -What would be the quantity demanded if a price ceiling is set at $400?

Let's say that you have a friend who was caught illegally selling a good on the black market.When the judge asks you to describe your friend's motivation as a seller,which of the following would most likely be your reply?

Let's say that you are a politician who promises cheaper gasoline for everyone in the country if you are elected.Once you are elected,you make gas cheaper by imposing a price ceiling that is one full dollar less than the market's equilibrium price.What would be the reaction of the sellers of gasoline and of the public to your price ceiling law? Would you expect to be reelected in the long run?

Refer to the accompanying table to answer the next five questions. -If rent control is established at $1,750,what would be the amount of disequilibrium in the apartment market?

Refer to the accompanying figure,which shows both short-run and long-run demand and supply curves.If there is a $4 binding price ceiling imposed on a pharmaceutical drug,what will be the amount of the disequilibrium in the short run?

Use the following table to answer the next five questions. -What is the surplus when the price floor is $1.75 in the market for public transportation?

If a good is subject to a binding price ceiling and you purchase it on the black market,what do you expect to happen to the price over time?

Use the following information to answer the next two questions. Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -What will happen in a market where a nonbinding price ceiling is removed?

Use the following table to answer the next three questions. -If the price ceiling for corn is $2.50,what amount and type of disequilibrium would be present in the market for corn?

Use the following table to answer the next five questions. -What is the quantity demanded when the price floor is $0.75 in the market for public transportation?

Use the following information to answer the next two questions. Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $50?

What will happen in a market where a binding price floor is removed?

Use the following table to answer the next five questions. -At what price level does the labor market experience its largest shortage?

Refer to the accompanying figure to answer the next two questions. -You would expect there to be many customers for a black market good when the opportunity cost of finding the good under a: