Exam 5: Price Ceilings and Floors

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 lost consumer surplus if a price ceiling of $4 is implemented?

Use the following to answer questions Figure: Labor Market 1 -(Figure: Labor Market 1)If there is a price floor set at $9,how much deadweight loss is created,if any?

If a price ceiling is below equilibrium price,the willingness to pay for the quantity provided will be above equilibrium price.

Use the following to answer questions Figure: Price Ceiling -(Figure: Price Ceiling)Refer to the figure.A price ceiling of $10 results in a:

Deregulation of the airline industry has led to:

If a price ceiling on gasoline is imposed,the total price of gasoline a buyer pays is likely to equal the legal price:

Even though shortages typically result from the imposition of price ceilings,the overall gains in economic efficiency outweigh the costs.

Price floors and price ceilings both result in lost gains from trade and decreases in the quality of the product.

Under rent controls:

A nonbinding price floor leads to a(n):

If the minimum wage is lowered and closer to the market level,the:

Deregulation improves the allocation of resources by:

Labor unions are composed of high-skilled workers,but generally support minimum wage laws that typically affect only low-skilled workers.Their support makes more sense by considering that low-skilled labor is a ______ for high-skilled labor,and minimum wages ______ the quantity demanded of low-skilled labor.

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.

In situations of excess demand,sellers might decrease service levels when they are unable to raise prices because they wish to:

The most common example of a price being controlled above market levels involves a good for which the:

Minimum wage laws are sometimes a price floor and sometimes a price ceiling.

The long-run supply curve for rent-controlled apartments is generally more inelastic than the short-run supply curve.

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

A price floor: