Exam 8: Price Ceilings and Floors

Use the following to answer questions: Figure: Government Price Controls -(Figure: Government Price Controls) Refer to the figure. The government enacts a price control causing a shortage of 15 units of the good. Therefore, the ________ is set at ________.

The U.S. government establishes a price floor of $1,000 on personal computers. The market price for netbooks (personal computers that specialize in Internet and other basic computer functions) is about $500. How would this price control affect the netbook market?

Likely the most significant example of federal price controls in the United States, in terms of value of regulated market, came in the market for:

Use the following to answer question 96: Figure: Supply and Demand 3 -(Figure: Supply and Demand 3) Refer to the figure. If the government sets a price ceiling at $8 in this figure, it will create a deadweight loss of:

Price controls such as those instituted by President Richard Nixon in 1971 led to severe shortages in many markets across the United States.

Use the following to answer questions: Figure: Effects of Price Ceilings -(Figure: Effects of Price Ceilings) Refer to the figure. Suppose that the data represent the retail gasoline market. At a price ceiling of $2, the total value of wasted time from waiting in line is:

Illustrate on a supply and demand diagram how price ceilings may distort the market outcome and specify what secondary effects price ceilings can create.

Use the following to answer questions: Figure: Price Floor -(Figure: Price Floor) Refer to the figure. How much unemployment results from the imposition of a price floor set at $10?

Deregulation of the airline industry has led to:

In the presence of a price floor, some suppliers are willing to take a lower price for their goods, but these trades never take place because they are illegal. This illustrates the problem of misallocation of resources.

Use the following to answer questions: Figure: Labor Market 1 -(Figure: Labor Market 1) Refer to the figure. If there is a price ceiling set at $6, how much shortage or surplus, if any, is there?

Although a minimum wage increases unemployment, it doesn't create a deadweight loss.

Figure: Labor Market Refer to the figure. Which statement is correct?

The blat economy described in the text results when price controls are:

Regulation of entry in the airline industry increased costs and reduced innovation.

Under rent controls:

When the maximum legal price is below the market price we say that there is a price:

Mobile homes are housing units installed on a permanent foundation owned by a landlord. Although a resident owns the home, she rents the foundation from the landlord. In theory, owners of mobile homes can transfer their home to a different foundation if the rent becomes too steep, but uninstalling, transporting, and reinstalling the mobile home is usually prohibitively expensive. This "lock-in" effect encourages state legislatures to create rent controls for mobile home foundations. Which statement is a plausible, unintended consequence of these laws?

Which President ended the price controls on oil?

Why do you think full-service gas stations have largely disappeared across the United States?