Exam 5: Market in Motion and Price Controls

Say that the equilibrium price of natural gas would be $5 per thousand cubic feet, but there is a price floor imposed at $7 per thousand cubic feet. That price floor is then lowered to $5 per thousand cubic feet. As a result,

Which of the following is likely to result in a smaller equilibrium quantity exchanged?

A non-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.​

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

A surplus will result whenever the:

A price floor set above the equilibrium price is binding.

Exhibit 5-11 Panel (a) Panel (b) ​ -Refer to Exhibit 5-11. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Whenever a price ceiling is imposed in a market,

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-3. Which of the following price controls would cause a surplus of 20 units of the good?

A more efficient process for refining oil into gasoline is developed. As a result, the market price of gasoline:

If market demand increases and market supply decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Exhibit 5-1 ​ ​ ​ -Refer to Exhibit 5-1. A price floor set at $10 would not cause a surplus.

If the supply of a product decreases by more than the demand increases:

If the price of apples falls and apples and oranges are substitutes, we would expect:

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-3. Which of the following price controls would cause a shortage of 20 units of the good?

The imposition of a binding price ceiling on a market causes quantity demanded to be

Whenever a price floor is imposed above equilibrium price, it is true that:

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price floor of $4 is imposed, a surplus of _____units of butter will be created.

An increase in the price of inputs used to produce good A will:

If nuts and bolts are complements, an increase in the price of nuts caused by a change in the supply of nuts will