Micro CH 6
Which of the following price ceiling would be binding in this market
$2
Which of the following price floors would be binding in this market?
$4
Suppose the government imposes a price ceiling of $5 on this market. What will be the size of the shortage in this market?
0 units
Suppose the government imposes a price floor of $1 in this market. What will be the size of the surplus in this market?
0 units
In response to a shortage caused by the imposition of a binding price ceiling on a market
1. Price will no longer be the mechanism that rations scarce resources 2. long lines of buyers may develop 3. sellers could ration the good or service according to their own personal biases
If a binding price ceiling is imposed on the computer market then
1. the quantity of computers demanded will increase 2. the quantity of computers supplied will decrease 3. a shortage of computers will develop
Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market?
8 units
Suppose the government imposes a price floor of $5 on this market. What will be the size of the surplus in this market?
8 units
A legal maximum on the price at which a good can be sold is called a price
Ceiling
In a competitive market free of government regulation
Price adjusts until quantity demanded equals quantity supplied
A shortage results when
a binding price ceiling is imposed on a market
a price floor will be binding only if it is set
above the equilibrium price
As rationing mechanisms, prices
are efficient, but long lines are inefficient
A price will be binding only if it is set
below the equilibrium price
A price ceiling is binding when it is set
below the equilibrium price, causing a shortage
A price ceiling is
legal maximum on the price at which a good can be sold
A binding price is shown in
panel B but not panel A
In a free, competitive market, what is the rationing mechanism?
price
In panel B, there will be
shortage of wheat
In the 1970s, long lines at gas stations in the United States were primarily a result of the face that
the U.S. government maintained a price ceiling on gasoline
If a price floor is not bind, then
the equilibrium price is above the price floor
If a price ceiling is not binding, then
the equilibrium price is below the price ceiling
An example of a price floor is
the minimum wage
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,
the quantity demanded of physicals decrease and the quantity of physicals doctors went to five increase
Suppose the equilibrium price of a physical examination 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 shifts to the left
If nonbinding price floor is imposed on a market, then
the quantity sold in the market will stay at the same
