ECON CHAPTER 8 Price Ceilings Price Floors

Kendra is a single mother living in poverty who prefers to receive a housing voucher. Which of the following describes how Kendra can use her housing voucher?

It is a document that provides a limit on how much a landlord can charge for rent. It is like money that can be used exclusively for housing. It is a document that certifies that a person qualifies for rent-controlled housing. It is a lottery ticket that is an ineffective way to help the poor obtain affordable housing.

What will happen to the apartment market in Chicago if the city government decides to set the price for two-bedroom apartments below the market equilibrium price in an attempt to make apartment living more affordable for local families?

Landlords will lose revenue, even though more families will move into apartments. Landlords' revenues will fall, and fewer families will live in apartments. Landlords will receive higher revenues, as more families will live in apartments. Families will benefit, as more of them will be able to rent an apartment, and landlords' revenues will remain the same, as the lower prices will be counteracted by higher occupancy.

During the gasoline shortages in the United States in the 1970s, Americans blamed which of the following groups for the shortage?

U.S. bondholders Arab sheiks fellow Americans the Israeli government

Which of the following is NOT the result of a price ceiling?

additional gains from trade

If the public better understood the economics of price controls, it would:

understand why foreigners and oil companies conspired to cause gasoline shortages in the United States during the 1970s. clamor for more and more price controls. advocate price controls only for goods like gasoline and apartments. probably not advocate price controls on goods like gasoline and apartments.

What is rent control?

a price floor on rental housing a price ceiling on rental housing a price ceiling on owner-occupied housing a price floor on owner-occupied housing

Which of the following is an example of a price ceiling?

a subsidy a production quota rent control the minimum wage

If a particular good is _____, then a good case can be made for implementing a price control.

consumed by poor people consumed by millionaires produced by a monopoly that needs to be disciplined produced by a monopoly that does not need to be disciplined

A price floor:

encourages the most efficient allocation of resources. causes a shortage. prevents lost gains from trade. can lead to wasteful increases in quality.

According to your textbook, if price controls had not been implemented in 1973:

everyone would have been able to afford to heat their home. some people might not have been able to afford to heat their homes. there would have been widespread oil shortages. there would have been a surplus of oil.

Olivia notices that there are now shortages of dairy products and long lines in the dairy section of the grocery store. Which of the following could cause these shortages and long lines for dairy products?

free trade war, bad weather, or other supply disruptors profit maximization by firms price controls

If affordable housing is a concern, the most helpful policy would be

housing vouchers, because they do not cause housing shortages.

The public tends to blame oil companies and foreigners for gasoline shortages because:

oil companies and foreigners both have much to gain from gasoline shortages. it has a firm grasp of economic theory. it does not understand the economics of price controls. oil companies and foreigners are responsible for most of society's problems.

When sellers have more customers than goods and cannot profit by raising prices because of price ceilings, they can still profit by:

reducing the quality of their goods. investing more in their marketing campaigns. selling more goods at a lower price. increasing the quality of their goods.

Price controls:

result in many goods being allocated through bribery and personal connections. encourage sellers to improve the quality of their goods. ensure that goods will be allocated efficiently through publicly announced prices. are usually the best way to help the poor.