Econ 101 Chap. 4

Use the information on the kumquat market in the following table to answer the questions.​ (Quantities are given in millions of crates per​ year.) The equilibrium price is ​$_____ and the equilibrium quantity is _____ million crates. ​(Enter your responses as​ integers.) How much revenue do kumquat producers receive when the market is in​ equilibrium? Kumquat producers receive ​$______ billion in revenue. ​(Enter your response rounded to one decimal​ place.) Suppose the federal government decides to impose a price floor of ​$25 per crate. Assume that the government does not purchase any surplus kumquats. Now how many crates of kumquats will consumers​ purchase? Consumers will purchase _____ million crates of kumquats. ​(Enter your response as an​ integer.) How much revenue will kumquat producers​ receive? Kumquat producers will receive ​$_____ billion in revenue. ​(Enter your response rounded to one decimal​ place.)

$15; 100; $1.5; 80; $2.0

he figure to the right illustrates the market for apples in which the government has imposed a price floor of ​$10 per crate. How many crates of apples will be sold after the price floor has been​ imposed? ____million crates of apples per year. ​(Enter your response as an​ integer.) Will there be a shortage or​ surplus? If there is a shortage or​ surplus, how large will it​ be? There will be a _______ of _______ million crates of apples per year. ​(Enter your response as an​ integer.) Will apple producers benefit from the price​ floor?

20; surplus; 6; A. Apple producers who are able to sell their apples at the ​$10 price per crate will benefit. B. Apple producers who are not able to sell their apples will not benefit. C. Total revenue for apple producers as a group will increase from ​$198 million to ​$200 million. D. Both a and b. E. All of the above. Answer: E

Someone who will be moving to Lowell next year and who intends to rent an apartment A.will be better off if they are able to find an apartment to rent because rent is lower due to the price ceiling. B.will be worse off if they are unable to find an apartment to rent. C.will be better off regardless of whether they find an apartment to rent because rent is lower due to the price ceiling. D.will be worse off regardless of whether they find an apartment to rent because there is a shortage of apartments. E.both a and b.

E

The competitive equilibrium rent in the city of Lowell is currently​ $1,000 per month. The government decides to enact rent control and to establish a price ceiling for apartments of​ $750 per month. Briefly explain whether rent control is likely to make each of the following people better or worse off. A. Someone currently renting an apartment in Lowell will be better off if they keep their apartment because rent is lower due to the price ceiling. B.will be worse off if they lose their apartment. C.will be better off regardless of whether they keep their apartment because rent is lower due to the price ceiling. D.will be worse off regardless of whether they keep their apartment because there is a shortage of apartments. E.both a and b.

E

Can economic analysis provide a final answer to the question of whether the government should intervene in markets by imposing price ceilings and price​ floors? Why or why​ not?

Economic analysis cannot provide such an answer because it seeks to address positive questions such as​ "what is."

A black market is

a market in which buying and selling occur at prices that violate government price regulations.

A Wall Street Journal article noted that a study by the U.S. Congressional Budget Office​ "estimated raising the minimum wage to​ $10.10 an hour would reduce U.S. employment by​ 500,000 but lift​ 900,000 Americans out of​ poverty." The minimum wage might reduce employment because

employer costs would increase.

Suppose that the government sets a price floor for milk that is above the competitive equilibrium price. With the price​ floor, consumers are willing to purchase the quantity indicated where the price floor intersects the_________ curve. With the price​ floor, the deadweight loss is equal to the area A. under the demand curve and above the supply curve for units up to the quantity with the price floor. B.above the supply curve for units between the quantity with the price floor and market equilibrium quantity. C.under the demand curve and above the supply curve for units between the quantity with the price floor and market equilibrium quantity. D.under the demand curve for units between the quantity with the price floor and market equilibrium quantity.

demand; c

A landlord who intends to ignore the law and illegally charge the highest rent possible for his apartments A.will be better off if he does not get caught because that amount will be above the equilibrium. B.will be worse off if he gets caught. C.will be worse off regardless of whether he gets caught because that amount will still be below the equilibrium. D.will be better off because the highest rent possible and the price ceiling are both above the equilibrium. E.both a and b.

e

if San Francisco were to repeal its rent control​ law, the prices for short rentals in the city listed on Airbnb and other​ peer-to-peer sites would likely

fall because more housing units would become available as the average rent increased.

Black markets may arise

in reaction to binding price ceilings.

These estimates influence the normative analysis of the minimum wage because they

influence the judgement of policymakers and members of the general republic regarding this issue.

The minimum wage might raise some people out of poverty because

it would increase the incomes of people who had minimum wage jobs previously.

why do some consumers tend to favor price controls while others tend to oppose​ them?

price ceilings generate shortages.​ consequently, the consumers who obtain the product at a lower price​ win, but other consumers will lose because they would like to purchase the product but are unable to because of a shortage.

Do producers tend to favor price floors or price​ ceilings? ​ Why? Producers favor

price floors​ because, when​ binding, price floors increase price above the equilibrium and may increase producer surplus.

A landlord who intends to abide by the rent control law

will be worse off because he will be receiving less rent.