Ch. 6
ceiling
A legal maximum on the price at which a good can be sold is called a price
a legal maximum on the price at which a good can be sold.
A price ceiling is
below the equilibrium price, causing a shortage.
A price ceiling is binding when it is set
below the equilibrium price.
A price ceiling will be binding only if it is set
above the equilibrium price.
A price floor will be binding only if it is set
a binding price ceiling is imposed on a market.
A shortage results when
the minimum wage
An example of a price floor is
are efficient, but long lines are inefficient
As rationing mechanisms, prices
-the quantity of computers demanded will increase. -the quantity of computers supplied will decrease. -a shortage of computers will develop. All of the above are correct.
If a binding price ceiling is imposed on the computer market, then
the quantity sold in the market will stay the same
If a nonbonding price floor is imposed on a market, then
the equilibrium price is below the price ceiling.
If a price ceiling is not binding, then
the equilibrium price is above the price floor
If a price floor is not binding, then
price adjusts until quantity demanded equals quantity supplied.
In a competitive market free of government regulation,
price
In a free, competitive market, what is the rationing mechanism?
-price will no longer be the mechanism that rations scarce resources. -long lines of buyers may develop. -sellers could ration the good or service according to their own personal biases. All of the above are correct.
In response to a shortage caused by the imposition of a binding price ceiling on a market,
the U.S. government maintained a price ceiling on gasoline.
In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that
panel (b) but not panel (a)
Refer to Figure 6-1. A binding price ceiling is shown in
8 units
Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market?
0 units
Refer to Table 6-1. Suppose the government imposes a price ceiling of $5 on this market. what will be the size of the shortage in this market?
$2
Refer to Table 6-1. Which of the following price ceilings would be binding in this market?
$4
Refer to Table 6-1. Which of the following price floors would be binding in this market?
0 units
Refer to Table 6-1. Suppose the government imposes a price floor of $1 on this market. What will be the size of the surplus in this market?
8 units
Refer to Table 6-1. Suppose the government imposes a price floor of $5 on this market. What will be the size of the surplus in this market?
a surplus of wheat
Refer to figure 6-2. In panel (b), there will be
the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
the quantity demanded of physicals decreases and the quantity of physicals doctors want to give increases.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price floor of $250 per physical. As a result of the price floor,