Exam 4: Price Controls and Quotas: Meddling With Markets

Suppose the government sets a price floor below the current price of a good. This price floor will:

Assuming that U.S. and French wines are substitutes in consumption, if the U.S. government imposes a quota on the amount of French wine allowed into the United States and the quota is set at a quantity below equilibrium, the price of French wine in the United States will _____ while the price of the U.S.-produced wine will _____.

A binding price floor is likely to cause deadweight loss because:

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

The government imposes a price ceiling below the equilibrium price. The price ceiling will cause:

Use the following to answer questions: -(Figure: Rent Controls) Use Figure: Rent Controls. If rent controls are set at Rent₀:

A binding price floor causes:

Suppose that a binding price floor is in place in a particular market. If the market is deregulated and the price floor is removed:

The total amount of the good that can be transacted under a quantity control is called the:

A limit on the amount of a foreign currency people are allowed to buy is an example of a quota.

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

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

Quota limits that are less than the market equilibrium quantity cause:

In New York City there are more than 100,000 licensed taxicabs.

Use the following to answer questions: -(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 pounds of butter.

Price controls:

A binding price floor in the market for wheat:

Use the following to answer questions: -(Figure: Rent Controls) Use Figure: Rent Controls. If rent controls are set at Rent₀, renters would be willing to pay a price at least as high as:

When the government policy is to regulate the quantity of a good that can be bought and sold rather than the price at which it is transacted, it uses a:

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