Exam 8: Price Ceilings and Floors

Use the following to answer questions: Figure: Supply and Demand 5 -(Figure: Supply and Demand 5) Refer to the figure. In the figure, representing a market for apartments, with a rent-controlled price of $800, the long-run supply curve will be ______ elastic than the short-run supply curve, causing the _____.

Use the following to answer questions: Figure: Supply and Demand 5 -(Figure: Supply and Demand 5) Refer to the figure. In the figure, representing a market for apartments, a rent-controlled price of $800 will cause:

If price controls are imposed, gains from trade, including consumer and producer surplus, are likely to increase.

Shortages occur when prices are held below the market price, causing the quantity demanded to exceed the quantity supplied. This is a result of price:

Which would be the least likely result of a price ceiling imposed in the market for rental cars?

Use the following to answer questions: Figure: Price Ceilings and Consumer Surplus -(Figure: Price Ceilings and Consumer Surplus) Refer to the figure. There is a price ceiling of $20. What is the value of consumer surplus if all units of the good are allocated to the highest valued uses?

The higher the minimum wage is above the equilibrium wage, the:

Which is NOT a result of rent control?

After a hurricane, the prices of many items rise. How BEST might the government help poor people be able to afford to buy goods and services?

If the equilibrium wage is $10 an hour and the government sets a minimum wage of $8, there will be a shortage of labor.

Use the following to answer questions: Figure: Price Ceiling -(Figure: Price Ceiling) Refer to the figure. When a price ceiling of $10 is instituted by the government, consumers are able to buy how many units of the product?

Suppose a $3 per gallon price ceiling is imposed on gasoline, and the equilibrium price of gasoline is $2 per gallon. Such a price ceiling would lead to long lines at gas stations.

Use the following to answer questions: Figure: Price Ceilings and Consumer Valuation -(Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. What is the loss of consumer surplus due to the random allocation of price-controlled goods compared to the allocation only to the highest-value users?

Why is the long-run supply curve of rent-controlled apartments typically more elastic than the short-run supply curve?

When prices are not allowed to rise, there is no incentive for suppliers to ship resources to where they are needed most.

Figure: Value of Uses The sections labeled A, B, and C represent, respectively, the:

Use the following to answer questions: Figure: Costs of Price Ceilings 2 -(Figure: Costs of Price Ceilings 2) Refer to the figure. What is the dollar amount of the deadweight loss after the price ceiling of $4 has been implemented?

Which statement would be the least likely result of rent controls?

Which statement is TRUE in a market with a price ceiling?

A price ceiling is a(n):