Chatper 5
All else equal, if a price floor above the equilibrium is imposed on a market and the government buys the surplus, consumer surplus will _____ and producer surplus will
B) fall; rise
4. (Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. If there were a binding price ceiling in the market for hybrid cars, one possible price would be equal to _____; consumers would demand _____; and producers would supply
C) P3; Q3; Q1
. A student organization is formed on your college campus to protest against the high rent for apartments near campus. This organization is planning a meeting with the dean and president of the college. Which of the following best describes the policy the student organization will fight for?
a price ceiling
A binding price floor causes:
a surplus in the market and wasted resources.
An increase in producer surplus would most likely occur if:
an effective price floor was imposed.
Rent controls in New York City cause all of the following EXCEPT:
an increase in the quantity supplied of rent-controlled apartments.
This is result of increasing the minimum wage is an example of
black markert
Athos is an avid collector of swords, but as they are illegal to purchase, he obtains them through illicit means.
black market
. Suppose the government of the oil-rich country Saudi Arabia sets gasoline prices at $0.25 per gallon when the market price is $1.50. The Saudi government's actions will:
cause gasoline shortages even in an oil-rich country.
(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government wants to limit shrimp sales to 500 pounds, it can impose a price:
floor of $15 or ceiling of $10.
Suppose the government sets a price floor below the current price of a good. This price floor will:
have no effect on the price of the good.
Ivan, a Russian fishermen, needs a permit so that he can participate in commercial ice fishing for yellow perch and legally sell the perch he catches.
license
Rent controls are a typical example of a price ceiling. Please select all likely consequences of rent controls when the price ceiling is binding
more subletting of apartments, black markets, inefficient allocations of apartments, reductions in apartment qualities
D'Artagnan, a poor French noblemen, discovers a large cache of truffles in his backyard. However, the government caps the sale of truffles at $100 /pound, which frustrates D'Artagnan because he knows they are worth more than that.
price ceiling
Steve decides not to rent out his second home since he is not allowed to set the rate above $1000 per month even though he knows he could find renters willing to pay much more.
price ceiling
. Inefficient allocations of goods to consumers often result from:
price ceilings.
Garret is an undergraduate looking for a job to pay for college. As Garret seeks employment, he is glad to know that he will be paid at least $7.25 per hour.
price floor
To help out farmers, the government sets the minimum price of potatoes at $26 per bushel.
price floor
What type of price control would policy makers use to keep the price of beef from getting too low
price floor
Rent controls set a price ceiling below the equilibrium price, and therefore:
quantity demanded exceeds the quantity supplied.
In order to support domestic sales of textiles, the country of Germany puts a cap on the amount of foreign textiles it imports.
quota
which is likely to result from increasing the minimum wage
some employers and workers will agree on a wage of less than $20 and not the report the wages to the government
The government might impose a price floor if _____ can make a strong moral or political argument for _____ prices.
suppliers; higher
. A price floor is likely to cause deadweight loss because:
the quantity of the good is less than the equilibrium quantity
When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling:
the transaction takes place on a black market.