Monday Quiz 10-22

A price ceiling that sets the price of a good below market equilibrium will cause

(1) an increase in quantity demanded of the good. (2) a decrease in quantity supplied of the good. (3) a shortage of the good.

A price ceiling set below an equilibrium price tends to cause persistent imbalances in the market because

Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?

There will be a shortage of beef.

A black market is

a market that operates outside the legal system, either by selling illegal goods or by selling goods at illegal prices.

A subsidy is defined as

a payment to either the buyer or seller of a good or service, usually on a per-unit basis, when a good or service is purchased.

Both price floors and price ceilings lead to

a reduction in the quantity traded.

When a price ceiling is imposed below the equilibrium price of a commodity,

a shortage of the good will develop.

A minimum wage that is set above a market's equilibrium wage will result in

an excess supply of labor, that is, unemployment.

A market that operates outside the legal system, either by selling illegal goods or by selling goods at illegal prices is referred to in economics as a

black market.

A payment the government makes to either the buyer or seller, usually on a per-unit basis, when a good or service is purchased or sold is called a

subsidy.