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. If rent controls are imposed and the government wants them to be immediately effective, they will most likely be set at either _____ or _____.

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

To be binding, a price floor must be set:

Quantity controls set below the equilibrium quantity cause all of the following EXCEPT:

Rent controls in New York City cause all of the following EXCEPT:

Use the following to answer questions Figure: The Market for Hybrid Cars -(Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. What area represents deadweight loss if there is a binding price floor at P₁?

A quota is the minimum amount of some good that can be bought and sold.

Figure: The Market for Butter -(Figure: The Market for Butter) Look at the figure The Market for Butter. If a government price floor at $1.10 is imposed on this market, an inefficiency will result in the form of a _____ of _____ million pounds of butter.

How is a quota limit different from or similar to a price control?

If the demand curve for clams is downward-sloping, a quota that is set below the equilibrium quantity will decrease the price that consumers pay for clams.

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 _____.

Inefficient allocations of goods to consumers often result from:

Use the following to answer questions Figure: Price Controls -(Figure: Price Controls) Look at the graph Price Controls. An effective price floor would be at price _____ and a _____ would result from the difference between points _____.

The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price ceiling in the market at $0.40 per pound:

Use the following to answer questions Figure: Market I -(Figure: Market I) Look at the figure Market I. If a price floor of $15 is imposed on this market and the government chooses to purchase the surplus, the government must buy _____ units of the good and spend a total amount of _____ on its purchase.

Critics of the pharmaceutical industry often argue that price ceilings should be imposed on drug manufacturers. If this happened, the quality of drugs would improve.

Use the following to answer questions Figure: Supply and Demand -(Figure: Supply and Demand) Look at the figure Supply and Demand. A binding price ceiling is represented by:

A price ceiling is:

The National Football League does not license quarterbacks. This means that the free market determines the standards that an aspiring quarterback must achieve.

Use the following to answer questions : -(Table: Quantity Supplied and Quantity Demanded) Look at the table Quantity Supplied and Quantity Demanded. If a price ceiling of $10 is imposed in this market: