Chapter 6

At what price level does the apartment market reach equilibrium

$1,700

What would be the quantity demanded if a price floor is set at $100

1,400

What would be the equilibrium quantity for used cars?

21,474

Apartment rent control in NYC is an example of

A binding price ceiling

What is the incentive to create a black market when a binding price ceiling still exists

A black market emerges because sellers want a market where they can sell higher-quality products at higher prices

The economic entity most likely to engage in price gouging is

An individual or business who has a supply of the product somewhere else

If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season, what will be the consequence?

Consumers will be unable to buy all the gas they want at the temporary price ceiling price.

Why do shortages develop under a binding price ceiling?

It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.

Government officials who impose price controls

Might not understand that their actions causes confusion in the price signaling mechanism that directs that allocation of resources

If a price ceiling is imposed at $15 per unit when the equilibrium market is $12, there will be

No surplus or shortage

Which of the following is NOT a mechanism for allocating housing in rent-controlled areas?

Price

Katherine is the president of the United States. In attempt to make gasoline prices cheaper, she has imposed a binding price ceiling on gas. What would she expect her critics to say?

The binding price ceiling will increase the likelihood that customers obtain needed gasoline on the black market

At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium

The quantity supplied would increase by 32,000 units

If there is a $60 price ceiling imposed on a textbook, what will be the disequilibrium amount?

There will be a shortage of 800,000 textbooks

Jamie, an economics student, was just named Miss Florida, based in part on her answer to the question of why price gouging laws should be relaxed in that state. Jamie won because she gave which of the following answers?

They prevent customers who are willing to pay high prices for needed products from doing so during a time of disaster