MBF Connect - Chapter 3 Homework Part 2

Which conditions typically arise from the limits of price movement imposed by a price ceiling for a product?

A black market A rationing problem

True or false: A price at or above the price floor is illegal.

False

Which of the following best explains why economists "sound the alarm" when politicians advocate government-controlled prices such as price ceilings or price floors?

Government-controlled prices cause shortages. Government-controlled prices distort resource allocation. Government-controlled prices may cause potential environmental damage. Government-controlled prices cause surpluses.

In which of the following situations will quantity supplied exceed the quantity demanded?

In the imposition of a price floor.

In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?

Prices are too high for consumers. Prices are too low for firms.

Which of the following in the rental market for housing benefits renters, but makes it unprofitable for suppliers or landowners?

a price ceiling

Economists generally ______ government-controlled prices, such as price ceilings and price floors.

advise against

At any price below equilibrium price, or price ceiling, quantity demanded will ______ quantity supplied resulting in a persistent excess demand or shortage of product.

be greater than

Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price.

ceilings; below

The function and purpose of enacting a price ceiling is to enable ______.

consumers to obtain some "essential" good or service they could not afford at the equ

With a price ceiling, the quantity of a product _____ will exceed quantity , ____ resulting in a persistent shortage of the product

demanded ; supplied

When a price ceiling is established, the new price and quantity are now at ______.

disequilibrium

Government-controlled prices cause _____

distortions in resource allocation surpluses shortages

A price _____ is a minimum price fixed by the government, generally imposed above the equilibrium price

floor

Which of the following causes shortages or surpluses, distortions in resource allocation, and negative side effects?

government controlled prices

Consumers of wheat-based products pay _____ prices if there is a price floor set for wheat.

increased

A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______.

legal; illegal

A price floor in the wheat market benefits ______ and is nonbeneficial for ______.

producers; consumers

When a price ceiling is enacted, the new price is established below the old equilibrium price, quantity demanded ______ and quantity supplied ______ thus creating disequilibrium

rises; falls

Price floors are invoked when a society feels that ______ sufficient income for resource suppliers or producers.

the free market has not provided