econ exam 2 price floors and ceilinmgs
Jacuzzi tubs have an equilibrium price of $2000. The government imposes a price ceiling of $1500, which causes a shortage. Which of the following would worsen the shortage?
. Jacuzzi tubs become more popular because of a celebrity endorsement.
What is the difference between a price ceiling and a price floor?
A price ceiling is a maximum legal price, and a price floor is a minimum legal price.
Which of the following tends to happen when rent controls are imposed?
A. The quantity of apartments demanded exceeds the quantity supplied. B. People offer illegal payments to landlords to get apartments. C. People have difficulty finding vacant apartments.
The government imposes a price floor above the equilibrium price in a market. In the short run, the market has price inelastic demand and supply. In the long run, the market has price elastic demand and supply. What are the short-run and long-run effects of the price floor?
D. In the short run, there is a surplus. In the long run, the surplus worsens.
In 1994, San Francisco placed rent controls on multi-family housing built before 1980. What was the effect of this policy?
Landlords reduced the supply of rental housing, which increased rents across the city
In the 1980s, the federal government allowed several New England states to place a price floor on dairy products. Which of the following was a predictable consequence of imposing a price floor?
New England dairy farmers had millions of pounds of surplus dairy products.
What is a difference between price floors and subsidies?
Price floors cause surpluses; subsidies cause neither shortages nor surpluses.
Which of the following is a difference between rent control and rent subsidies?
Rent control discourages the construction of apartments. Rent subsidies encourages the construction of apartments.
Which of the following statements are true?
The minimum wage is more likely than wage subsidies to reduce employment of low-skilled workers.
The equilibrium rent for apartments is $1000 per month, and the government imposes rent control of $250. Which of the following is NOT a predicted outcome of rent control?
There is an increase in the number of apartments built.
In the low-skilled labor market, the equilibrium wage is $3. The government enacts a minimum wage of $5. The following year, it raises the minimum wage to $10. Which of the following is a likely outcome?
Unemployment rises. Quantity of labor supplied rises.
Which of the following statements about price floors is correct?
When the price floor is above the equilibrium price, there will be a surplus.
Allie's marginal product is $10 per hour. Ben's marginal product is $6 per hour. Cora's marginal product is $5 per hour. In a free market, the equilibrium wage is $4 per hour. If the government enacts a minimum wage of $7, who receives a higher wage?
allie only
For a price ceiling to cause a shortage, the government must set it
below the equilibrium price.
The market for canned beans is in equilibrium. The government imposes a price ceiling, which causes a shortage. Which of the following makes the shortage worse?
demand + Supply increase
Throughout the 1970s, there were gas shortages run the United States. Upon taking office in 1980, President Reagan eliminated all price ceilings on gasoline. This
eliminated gas shortages.
The government sets a price ceiling in the market for steel, causing a shortage. Which of the following would worsen the shortage?
increase in steel demand
When the government enacts a price ceiling, which of the following is NOT likely to happen?
surplus
The equilibrium price of a doctor's exam is $200. If the government imposes a price ceiling of $300, then
the market remains in equilibrium at a price of $200
The equilibrium price of a doctor's exam is $200. If the government imposes a price ceiling of $100, then
the quantity demanded is larger than the quantity supplied
The equilibrium price of a bushel of wheat is $20. If the government imposes a price floor of $30, then..
the quantity supplied becomes larger than the quantity demanded.
Price ceilings are usually enacted..
when policymakers believe that the equilibrium price is too high.
