quiz 5

an economic advisory committee is split on a decision on how to react to an export ban by Mexico of avocados. in other words, Mexico has stopped shipping avocados to the U.S. Isaac wants to put a price ceiling on avocados to ensure an adequate demand; flora wants to put a price floor on avocados to ensure an adequate supply. April claims that doing nothing is the best response. who understands Econ the best?

April

which of the following is a correct statement

Rent control is an illustration of a price ceiling and the minimum wage is an illustration of a price floor.

why do government leaders impose price controls?

They are trying to ensure that a social goal is satisfied.

in the market for unskilled labor, the government has established:

a price floor

the imposition of a price ceiling always results in:

a shortage

a consequence of either a price ceiling or a price floor is

an unwanted market allocation

a black market is the result of buyers and sellers

circumventing a price control

which of the following represents one of the biggest problem with the minimum wage, other than being a price control?

it targets the wrong demographic of unskilled workers

which of the following benefit from the imposition of a price floor

only those sellers who are unable to sell all their output in the market

in a free market, which of the following is allowed to fluctuate

price

victor is a senator from Kansas who wants to help farmers. he has worked to encourage the passage of a law that would impose a binding price floor on wheat. what would he expect his critics to say?

the binding price floor will cause a surplus of wheat

a nonbinding price floor has which of the following consequences?

there are no consequences to a nonbinding price floor

what will happen in a market where a binding price floor is removed?

there will be downward pressure on the prices