Exam 5: Market in Motion and Price Controls

In an effort to reduce the surplus of dairy products, agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers) in 1996-1997. How did this influence the market for beef?

If the government removes a binding price floor from a market, then the price received by sellers will

A binding price ceiling 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.​

An increase in both the equilibrium price and the equilibrium quantity of a good could not have been caused by a shift in supply alone.

To say that a price ceiling is binding is to say that the price ceiling

A more efficient means of processing tree bark to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

When the demand and supply of a good both shift in the same direction and amount:

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price floor of $3 is imposed, a shortage of _____units of butter will be created.

Exhibit 5-11 Panel (a) Panel (b) ​ -Refer to Exhibit 5-11. The price ceiling shown in panel (b)

A major grocery store chain switches from bagging groceries in paper sacks to bagging them in plastic bags. As a result, the grocery chain demands more plastic bags than are available at the current market price. As a result:

In an attempt to reduce poaching of elephant ivory tusks, officials in Kenya burned illegally gathered ivory. Using your understanding of shifts in supply and demand, will this turn out to be a helpful or hurtful move on the Kenyan government's part?

Ceteris paribus, if the market demand for a product increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

If the price of peanut butter decreases substantially (ceteris paribus), the equilibrium quantity of jelly, a complement, is likely to:

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

When a binding price floor is imposed on a market,

After a binding price floor becomes effective, a

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price ceiling of $3 is imposed, a shortage of _____units of butter will be created.

If the equilibrium price of widgets is $22, and then a price ceiling of $24 is imposed by the government, as a result,

If the demand for apples decreases at the same time the supply of apples increases, the price of apples will tend to fall.

When the sale of a good is illegal, it is like setting a price ceiling at zero.