Exam 5: Price Controls and Quotas- Meddling With Markets

Use the following to answer questions Figure: Price Controls -(Figure: Price Controls) Look at the graph Price Controls. The consumer surplus lost to a price floor at point b is equal to the area:

West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States:

A minimum price that the government guarantees farmers will receive for a particular crop is:

Use the following to answer questions Figure: Market I -(Figure: Market I) Look at the figure Market I. A price floor of $5 imposed on this market would:

By definition, in a black market, goods or services are bought and sold:

The system of taxicab medallions in New York City is an example of a:

If the demand curve for clams is downward-sloping, a quota that is set below the equilibrium quantity will result in a demand price that is lower than the equilibrium price.

A binding minimum wage will generally cause increased unemployment for low-skilled workers.

A quota in the market for shrimp will cause inefficiency because mutually beneficial transactions will not occur.

An effective price floor will lead to:

When transatlantic airfares were set artificially high by an international treaty, airlines offered customers an inefficiently high quality of service.

Suppose the market price of wheat is $7 a bushel and a price ceiling is set at $9 a bushel. What is the impact of this price ceiling?

An effective price ceiling will most likely result in:

The government might impose a price ceiling if _____ can make a strong moral or political argument for _____ prices.

Typically the government limits the quantity of a good that can be bought and sold by:

If the demand curve for clams is downward-sloping and the supply curve is upward-sloping, a quota that is set above the equilibrium quantity will have no effect on the market.

If New York City had no medallion system for taxicabs, assuming that the supply curve of taxicab rides is upward-sloping and the demand curve for taxicab rides is downward-sloping, the price of a taxicab ride would:

A persistent shortage may occur if:

The difference between the demand price and the supply price at the quota limit amount is the:

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