Exam 5: Markets in Motion and Price Controls

Whenever a price ceiling is imposed in a market,

Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke)rose sharply in the late 1980s.Under these circumstances,the increase in the price of Coke occurs as a result of a(n):

A price ceiling is binding when it is set

If a price floor is not binding,then it will have no effect on the market.

A more efficient means of processing tree bark to produce an anticancer drug is discovered.As a result,the supply curve for the drug will:

Which of the following could be responsible for an increase in the price of wheat?

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the surplus?

Exhibit 5-6 Refer to Exhibit 5-6.The government imposes a $3.25 price ceiling at the same time there is a substantial decrease in the price of sport utility vehicles.(Assume that sport utility vehicles get very low mileage per gallon.)As a result,the:

If both market demand and supply increase simultaneously,then equilibrium quantity will (be)____ and equilibrium price will (be)____.

Exhibit 5-6 Refer to Exhibit 5-6.Assuming the market for gasoline is initially in equilibrium,what is likely to happen when there is a significant decrease in the price of sport utility vehicles? (Assume that sport utility vehicles get very low gas mileage.)

A price ceiling set above the equilibrium price causes a surplus in the market.

Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price.An increase in supply in both the wheat and gasoline markets will create:

A ban on the use of the technology used by most producers in an industry is likely to result in:

Which of the following combinations of changes would tend to both decrease the quantity of a good traded and increase the price?

For the price in a market to remain the same,while the quantity traded fell,both supply and demand would have to shift to the left.

Starting from an equilibrium position,

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $2.50 per loaf:

Which of the following is an example of an unintended consequence?

Exhibit 5-2 Refer to Exhibit 5-2.A movement from S₁ to S₂ could occur if:

If the government wanted to reduce the quantity of a good traded,it could do so by: