Exam 5: Price Controls and Quotas

Price controls:

Suppose that the Jamaican government sets coffee prices at $1 per kilogram when the market price is $10 per kilogram.The government's actions will:

Use the following to answer questions : Table: The Market for Taxi Rides Fare (per ride) Quantity Demanded (millions of rides per year) Quantity Supplied (millions of rides per year) \ 7.00 6 14 6.50 7 13 6.00 8 12 5.50 9 11 5.00 10 10 4.50 11 9 4.00 12 8 3.50 13 7 3.00 14 6 -(Table: The Market for Taxi Rides)Use Table: The Market for Taxi Rides.If a government quota limit at 9 million rides is imposed,the quota rent that will accrue to the owner of a taxi licence will be _____ per ride,but there will be a total missed opportunity (inefficiency)to consumers and producers of _____ million rides.

Suppose that the average cost of a visit to the dentist is $100.If the government imposes a price ceiling of $50 on the cost of a dental visit,there will be:

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

An increase in producer surplus would most likely occur if:

Use the following to answer questions : -(Figure: Supply and Demand)Use Figure: Supply and Demand.A price ceiling of P₃ causes:

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

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

Quotas are more effective than price controls because,unlike price controls,quotas do not cause deadweight loss.

Inefficient allocations of goods to consumers often result from:

Use the following to answer question 90: Figure: The Shrimp Market -If the minimum wage is a binding price floor:

One of the ways rent control is inefficient is that it leads to:

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

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

Use the following to answer questions : Figure: The Market for Butter -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million kilograms of butter.

Use the following to answer questions : Figure: The Market for Sandwiches -(Figure: The Market for Sandwiches)Use Figure: The Market for Sandwiches.How much total surplus would be lost if there were a quota of eight sandwiches that could be legally exchanged?

Rapidly increasing child daycare costs have been a major political concern since well before 1992.Suppose that the government sets the maximum price for daily child daycare expenses at $20 per day,but the current market price is $40 per day.What is MOST likely to happen?

A price ceiling is:

Use the following to answer questions : -(Figure: Rent Controls)Use 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 _____.