Econ Chap. 8

Under a binding price ceiling, one expects the quantity of a good to: a.) remain the same b.) fall c.) change in an indeterminate direction d.) rise

b.) fall

Which would NOT happen as the result of a price floor? a.) decrease in product quality b.) misallocation of resources c.) a surplus of the good d.) lost gains from trade

a.) decrease in product quality

New housing takes some to build, so rent control creates larger shortages in the: a.) long run than in the short run because long-run supply is more elastic b.) long run than in the short run because short-run supply is more elastic c.) short run than in the long run because long-run supply is more elastic d.) short run than in the long run because short-run supply is more elastic

a.) long run than in the short run because long=run supply is more elastic

Under rent control, bribery is used to: a.) make the total price of a rental property closer to the market price that would prevail without rent controls b.) make the total price of rental property less than the market price that would prevail without rent controls c.) allocate housing to the most deserving tenants d.) allocate the housing to the poorest individuals in the market

a.) make the total price of a rental property closer to the market price that would prevail without rent controls

If, under price control, quantity supplied = 50 and quantity demanded = 40, then the price control is a _____ a.) binding price ceiling b.) binding price floor c.) nonbinding price floor d.) nonbinding price ceiling

b.) binding price floor

A price ceiling creates a _____ when it is set _____ a.) surplus; below the equilibrium price b.) shortage; below the equilibrium price c.) surplus; above the equilibrium price d.) shortage; above the equilibrium price

b.) shortage; below the equilibrium price

If quantity supplied equals 80 units and quantity demanded equals 85 units under a price control, then it is a: a.) nonbinding price ceiling b.) nonbinding price floor c.) binding price ceiling d.) binding price floor

c.) binding price ceiling

A price floor causes _____ a.) a shortage b.) excess demand c.) quantity demanded to exceed quantity supplied d.) a surplus

d.) a surplus

A binding price ceiling leads to a(n): a.) quantity of 0 units b.) equilibrium quantity c.) surplus d.) shortage

d.) shortage

the maximum price allowed by law

price ceiling