Exam 5: Price Ceilings and Floors

Figure: Short and Long Run Shortages Use the figure.At a rent-controlled price of $800,the short-run shortage of apartments is ________ and the long-run shortage is ________.

Effective price ceilings cause misallocation of resources because scarce resources are usually not allocated to their highest-value uses.

Use the following to answer questions Figure: Effects of Price Ceilings -(Figure: Effects of Price Ceilings)Refer to the figure.At a price ceiling of $2:

Southwest Airlines was able to enter the national market in 1978 as a result of:

Vietnam's foreign minister said,"The Americans couldn't destroy Hanoi,but we have destroyed our city by very low rents." He was referring to the fact that:

The quantity exchanged of a good ______ under a binding price floor.

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

Which statement(s)is TRUE? I.In the long run,rent-control laws create incentives to turn apartments into hotels or parking garages. II.Apartment owners are less likely to do routine maintenance when the government controls apartment rents. III.Rent-controlled apartments are more likely to be allocated by discrimination than non-rent-controlled apartments.

Use the following to answer questions Figure: Costs of Price Ceilings -Allocating products with long lines,using a first-come,first-served system,is:

Deadweight loss is:

Airlines in the United States were subject to ______ regulation from 1938 to 1978.

Use the following to answer questions Figure: Effects of Price Ceilings -(Figure: Effects of Price Ceilings)Refer to the figure.At a price ceiling of $2 per unit,consumers are willing to pay a maximum of:

The producer and consumer surplus lost as a result of price ceilings is often referred to as deadweight loss.

The price floor regulation of the airline industry:

Rent control is an example of a:

Use the following to answer questions Figure: Costs of Price Ceilings -(Figure: Costs of Price Ceilings)Refer to the figure.What is the dollar amount of the value of wasted time if a price ceiling of $4 is implemented?

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

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

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

At a price ceiling of $6 per sheet of drywall,quantity demanded is 100 and quantity supplied is 75.What will happen in the drywall market if there is an increased demand for drywall in the construction industry?