Question 1

A price ceiling below the equilibrium price is likely to result in a persistent _____,a transfer of surplus from _____,and _____ deadweight loss.

Accepted Answer

A)  surplus;producers to some consumers;some 
B)  shortage;producers to some consumers;some 
C)  shortage;some consumers to producers;no 
D)  surplus;some consumers to producers;some 
A)  surplus;producers to some consumers;some 
B)  shortage;producers to some consumers;some 
C)  shortage;some consumers to producers;no 
D)  surplus;some consumers to producers;some

Question 2

The quota rent is the same thing as deadweight loss.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  licensing the suppliers. 
B)  setting a price floor below the equilibrium price. 
C)  maintaining the equilibrium price regardless of changes in demand and supply. 
D)  setting a price ceiling above the equilibrium price. 
A)  licensing the suppliers. 
B)  setting a price floor below the equilibrium price. 
C)  maintaining the equilibrium price regardless of changes in demand and supply. 
D)  setting a price ceiling above the equilibrium price.

Question 4

A binding price ceiling is usually designed to:

Accepted Answer

A)  keep prices below the equilibrium level. 
B)  increase the quality of the good. 
C)  prevent shortages. 
D)  increase efficiency. 
A)  keep prices below the equilibrium level. 
B)  increase the quality of the good. 
C)  prevent shortages. 
D)  increase efficiency.

Question 5

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

Accepted Answer

A)  rental apartments may be of inefficiently low quality. 
B)  there will be an efficient allocation of rentals. 
C)  some landlords may break the law by renting below the mandated price. 
D)  new apartments will be constructed. 
A)  rental apartments may be of inefficiently low quality. 
B)  there will be an efficient allocation of rentals. 
C)  some landlords may break the law by renting below the mandated price. 
D)  new apartments will be constructed.

Question 6

A persistent shortage may occur if:

Accepted Answer

A)  the government imposes a price ceiling below the equilibrium price. 
B)  the government imposes a price floor below the equilibrium price. 
C)  demand keeps falling. 
D)  supply shifts rightward. 
A)  the government imposes a price ceiling below the equilibrium price. 
B)  the government imposes a price floor below the equilibrium price. 
C)  demand keeps falling. 
D)  supply shifts rightward.

Question 7

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  consumers will respond to the lower price and wish to purchase more of the good than at the equilibrium price. 
B)  producers will respond to the lower price and offer more units for sale. 
C)  consumers will be able to purchase more of the good after the price ceiling is imposed. 
D)  it will not be binding. 
A)  consumers will respond to the lower price and wish to purchase more of the good than at the equilibrium price. 
B)  producers will respond to the lower price and offer more units for sale. 
C)  consumers will be able to purchase more of the good after the price ceiling is imposed. 
D)  it will not be binding.

Question 9

The system of a special numbered plate that must be affixed to the taxicab in Toronto is an example of a:

Accepted Answer

A)  price subsidy. 
B)  nonbinding price ceiling. 
C)  price floor. 
D)  quantity control. 
A)  price subsidy. 
B)  nonbinding price ceiling. 
C)  price floor. 
D)  quantity control.

Question 10

Use the following to answer questions :  
-(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.If a price floor at P4 is set to help improve farm incomes and the government wants to assure farmers that their output will be purchased,the government must purchase an amount of output equal to:

Accepted Answer

A)  Q3-Q0. 
B)  Q3-Q1. 
C)  Q2-Q1. 
D)  Q1-Q3. 
A)  Q3-Q0. 
B)  Q3-Q1. 
C)  Q2-Q1. 
D)  Q1-Q3.

Question 11

A binding rent-control price ceiling does NOT result in:

Accepted Answer

A)  inefficiently low transaction costs. 
B)  wasted resources of consumers caused by time spent searching for the good. 
C)  inefficient allocation of the good to consumers. 
D)  inefficiently high quality of the good being sold. 
A)  inefficiently low transaction costs. 
B)  wasted resources of consumers caused by time spent searching for the good. 
C)  inefficient allocation of the good to consumers. 
D)  inefficiently high quality of the good being sold.

Question 12

Use the following to answer question 36:  
-(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point _____,and there would be a _____ equal to the difference between points _____.

Accepted Answer

A)  b;surplus;f and e 
B)  b;shortage;f and e 
C)  d;shortage;i and h 
D)  d;surplus;e and h 
A)  b;surplus;f and e 
B)  b;shortage;f and e 
C)  d;shortage;i and h 
D)  d;surplus;e and h

Question 13

A price ceiling will have NO immediate effect if:

Accepted Answer

A)  it is set above the equilibrium price. 
B)  the equilibrium price is above the price ceiling. 
C)  it is set below the equilibrium price. 
D)  it creates a shortage. 
A)  it is set above the equilibrium price. 
B)  the equilibrium price is above the price ceiling. 
C)  it is set below the equilibrium price. 
D)  it creates a shortage.

Question 14

If the government imposes binding rent control:

Accepted Answer

A)  rent will be set above the equilibrium price. 
B)  it may result in some landlords leaving the business because they cannot cover costs. 
C)  it will lead to rental units being higher in quality because landlords are guaranteed a high price. 
D)  it will cause a surplus of housing. 
A)  rent will be set above the equilibrium price. 
B)  it may result in some landlords leaving the business because they cannot cover costs. 
C)  it will lead to rental units being higher in quality because landlords are guaranteed a high price. 
D)  it will cause a surplus of housing.

Question 15

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

Accepted Answer

A)  Quantity controls do not lead to deadweight loss. 
B)  Some mutually beneficial transactions do not occur because of quantity controls. 
C)  Quantity controls provide incentives for illegal activities. 
D)  Quantity controls cause a wedge between the demand price and supply price. 
A)  Quantity controls do not lead to deadweight loss. 
B)  Some mutually beneficial transactions do not occur because of quantity controls. 
C)  Quantity controls provide incentives for illegal activities. 
D)  Quantity controls cause a wedge between the demand price and supply price.

Question 16

To be binding,a price ceiling must be set at a price _____ the equilibrium price.

Accepted Answer

A)  lower than 
B)  higher than 
C)  the same as 
D)  Any price ceiling is binding. 
A)  lower than 
B)  higher than 
C)  the same as 
D)  Any price ceiling is binding.

Question 17

Use the following to answer questions : $$\begin{array}{l}
\text { Table: The Market for Pop }\
\begin{array} { l c c } 
\hline &  { \text { Market for a Can of Pop } } \
 \begin{array} { l } 
\text { Price } \
\text { (\$/unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (cans) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (cans) }
\end{array} \
\hline 0.50 & 10 & 7 \
0.75 & 8 & 8 \
1.00 & 6 & 9 \
1.25 & 4 & 10 \
1.50 & 2 & 11
\end{array}
\end{array}$$
-(Table: The Market for Pop)Use Table: The Market for Pop.If the government does NOT impose a price control,the price of a can of pop will equal:

Accepted Answer

A)  $0.50. 
B)  $0.75. 
C)  $1.00. 
D)  $1.25. 
A)  $0.50. 
B)  $0.75. 
C)  $1.00. 
D)  $1.25.

Question 18

Use the following to answer questions : $$\begin{array}{l}
\text { Table: The Market for Banana Muffins }\
\begin{array} { c c c } 
\hline & { \text { Market for Banana Muffins } } \
 \text { Price } & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (units) }
\end{array} \
\hline \$ 1.10 & 9000 & 3000 \
1.20 & 8000 & 5000 \
1.30 & 7000 & 7000 \
1.40 & 6000 & 9000 \
1.50 & 5000 & 1100
\end{array}
\end{array}$$
-(Table: Market for Banana Muffins)Use Table: Market for Banana Muffins.If the government imposes a quota of 5 000 on the banana muffin market,the quota rent per banana muffin will be:

Accepted Answer

A)  $1.20. 
B)  $0.30. 
C)  $1.50. 
D)  $1.00. 
A)  $1.20. 
B)  $0.30. 
C)  $1.50. 
D)  $1.00.

Question 19

Use the following to answer questions :
Table: The Market for Taxi Rides $$\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Fare } \
\text { (per ride) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (millions of rides } \
\text { per year) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (millions of rides } \
\text { per year) }
\end{array} \
\hline \$ 7.00 & 6 & 14 \
6.50 & 7 & 13 \
6.00 & 8 & 12 \
5.50 & 9 & 11 \
5.00 & 10 & 10 \
4.50 & 11 & 9 \
4.00 & 12 & 8 \
3.50 & 13 & 7 \
3.00 & 14 & 6 \
\hline
\end{array}$$
-(Table: The Market for Taxi Rides)Use Table: The Market for Taxi Rides.If a government quota limit at 7 million rides is imposed on this market,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.

Accepted Answer

A)  $1;1 
B)  $2;2 
C)  $3;3 
D)  $4;4 
A)  $1;1 
B)  $2;2 
C)  $3;3 
D)  $4;4

Question 20

Suppose that the Canadian government imposes a binding quota on the number of Japanese-made cars allowed into Canada.Assuming that Japanese-made cars and Canadian-made cars are substitutes in consumption,we would expect the price of Japanese cars to _____ and the price of Canadian-made cars to _____.

Accepted Answer

A)  increase;increase 
B)  increase;decrease 
C)  decrease;increase 
D)  decrease;decrease 
A)  increase;increase 
B)  increase;decrease 
C)  decrease;increase 
D)  decrease;decrease

A price ceiling below the equilibrium price is likely to result in a persistent ___,a transfer of surplus from _,and ___ deadweight loss.

The quota rent is the same thing as deadweight loss.

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

A binding price ceiling is usually designed to:

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

A persistent shortage may occur if:

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

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

The system of a special numbered plate that must be affixed to the taxicab in Toronto is an example of a:

A binding rent-control price ceiling does NOT result in:

Use the following to answer question 36: -(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point ___,and there would be a _ equal to the difference between points ___.

A price ceiling will have NO immediate effect if:

If the government imposes binding rent control:

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

To be binding,a price ceiling must be set at a price _____ the equilibrium price.

Suppose that the Canadian government imposes a binding quota on the number of Japanese-made cars allowed into Canada.Assuming that Japanese-made cars and Canadian-made cars are substitutes in consumption,we would expect the price of Japanese cars to _ and the price of Canadian-made cars to _.

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 5: Price Controls and Quotas

A price ceiling below the equilibrium price is likely to result in a persistent _____,a transfer of surplus from _____,and _____ deadweight loss.

The quota rent is the same thing as deadweight loss.

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

A binding price ceiling is usually designed to:

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

A persistent shortage may occur if:

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

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

The system of a special numbered plate that must be affixed to the taxicab in Toronto is an example of a:

A binding rent-control price ceiling does NOT result in:

Use the following to answer question 36: -(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point _____,and there would be a _____ equal to the difference between points _____.

A price ceiling will have NO immediate effect if:

If the government imposes binding rent control:

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

To be binding,a price ceiling must be set at a price _____ the equilibrium price.

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

A price ceiling below the equilibrium price is likely to result in a persistent ___,a transfer of surplus from _,and ___ deadweight loss.

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

Use the following to answer question 36: -(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point ___,and there would be a _ equal to the difference between points ___.