Exam 5: Price Controls and Quotas: Meddling With Markets

(Figure: Supply and Demand in Agriculture) Look at the 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:

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:

When the government removes a binding price floor:

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

Use the following to answer questions: -(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $0.50 per can of soda, the quantity of soda demanded will be:

If the government imposes binding rent control:

If government decides to control the amount of a good allowed into a market, this will:

The persistent unwanted surplus that results from a price floor causes inefficiencies that include all of the following EXCEPT:

Suppose the government of the oil-rich country Saudi Arabia sets gasoline prices at $0.25 per gallon when the market price is $1.50. The Saudi government's actions will:

The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus:

Use the following to answer questions: 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.

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

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

Use the following to answer questions: Figure: The Shrimp Market -(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government imposes a quota limiting sales of shrimp to 250 pounds, it will have the same effect on transactions as a price floor of:

Inefficient allocations of goods to consumers often result from:

If the government imposes a limit on sales of a good or service by licensing the right to sell a given quantity of the good, the difference between the demand and supply price is:

Use the following to answer question: Figure: The Market for English Textbooks -(Figure: The Market for English Textbooks) Look at the figure The Market for English Textbooks. With a binding price floor at $90, the market outcome would be a _____ of _____ textbooks.

Which is NOT an inefficiency caused by binding price ceilings?

When price controls take the form of maximum prices set below the equilibrium price, they are:

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