30: Government Intervention in the Functioning of Markets

A shortage is always caused by a price ceiling

False

The government has used rent controls in the past to keep rents below equilibrium. This is an example of a price ceiling.

True

The minimum wage is an example of

a price floor

A price ceiling can create

a shortage

A price floor can create

a surplus

When the demand for a good or service increases,

equilibrium quantity increases

When the supply of a good or service increases,

market supply increases

A ______ is created when the quantity demanded is greater than the quantity supplied

shortage

A price ceiling is set by the government when prices are thought to be

too high

A price floor is set by the government when prices are thought to be

too low