Exam 5: Markets in Motion and Price Controls

You notice that the price of orange juice at your local grocery store has increased.Which of the following statements is not a possible explanation for the rise in the price of orange juice?

If there is a ceiling price below the equilibrium level,a decrease in demand will worsen the shortage.

Which of the following is likely to result in a smaller equilibrium quantity exchanged?

There is an increase in both consumer income and in the price of jet fuel,an important resource used to produce air travel.If air travel is a normal good,how will these changes influence the price and quantity purchased of air travel? The price of air travel will (be)____ and quantity purchased will (be)____.

Exhibit 5-6 Refer to Exhibit 5-6.If the government imposes a $2.50 price ceiling:

Exhibit 5-2 Refer to Exhibit 5-2.The movement from ____ is consistent with a decrease in demand.

When the demand and supply of grapes both increase at the same time,we can safely predict that the:

Price ceilings cause surpluses.

An increase in the expected future price of a good may act to increase the present price of the good.

As a result of the decline in the real estate markets,many sellers and builders were very eager to sell their homes.As a result of this greater willingness to sell,we would expect to see:

When a supply curve shifts,the equilibrium price will change in the opposite direction from the shift in supply and the quantity traded will change in the same direction as the shift in supply.

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

To be binding,a price floor must be set above the equilibrium price.

Explain the impact of: 1.A rent ceiling set below the equilibrium price. 2.A price floor set above the equilibrium price.

If the prices of productive substitute goods decreased and productive technology improved at the same time,as a result:

When a binding price floor is imposed on a market,

If the price of apples rises and the quantity of apples exchanged decreases,then we know that there cannot have been a:

A binding price floor i.causes a surplus. ii.causes a shortage. iii.is set at a price above the equilibrium price. iv.is set at a price below the equilibrium price.

A government mandated price increase for doodads will:

Which of the following is not a result of rent controls?