Exam 5: Price Controls and Quotas- Meddling With Markets

Use the following to answer questions 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, the market outcome would be a _____ of _____ textbooks.

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

Use the following to answer questions Figure: Supply and Demand in Agriculture -(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. The government could help increase farmers' income by setting a price _____ at _____, causing a _____ of _____.

Which of the following statements is (are) TRUE? I. Quantity controls drive a wedge between the demand price and the supply price of the good. II) The difference between the demand price and the supply price at the quota limit is consumer surplus. III) Quantity controls have no undesirable side effects.

A binding price ceiling is designed to:

How does an effective price ceiling affect the quantity demanded and the quantity supplied in a competitive market?

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.

The government decides to impose a price ceiling on a good because it thinks the market-determined price is too high. If the government imposes the price ceiling below the equilibrium price:

In a(n) _____ market goods or services are bought and sold illegally.

Quotas, price ceilings, and price floors are all types of quantity controls that the government may impose.

Producers will supply an inefficiently low quality of a good if the government imposes:

A rent control scheme setting a maximum amount of rent paid below the equilibrium rental price would most likely be supported by:

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.

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent₁:

Use the following to answer questions -(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda demanded will be:

An upper limit on the quantity of a good that can be bought and sold is a:

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

The quota rent is the same thing as deadweight loss.

The amount that consumers are willing to pay for the quota limit quantity is the:

The persistent unwanted surplus that results from a price floor causes inefficiencies that include all of the following EXCEPT: