1.A binding price ceiling is designed to:
A:increase efficiency.
B: keep prices low.
C:increase the quality of the good.
D
revent shortages.
2.Rapidly increasing health costs have been a major political concern since at least 1992. Suppose that to control rising health costs the government sets the maximum price for a normal doctor's visit at $20, but the current market price is $40. Then:
A:fewer people will try to see the doctor, and the doctors will see fewer patients.
B:more people will be able to see the doctor, since the price is lower.
C:more people will try to visit the doctor, but the doctor will see fewer patients.
D:the same number of people will try to visit the doctor, and the doctor will see the same number of patients.
3.The government decides to impose a price ceiling on a good, because it thinks the market-determined price is “too high.” If the government imposes the price ceiling below the equilibrium price:
A:consumers will respond to the lower price and therefore wish to purchase more of the good than at the equilibrium price.
B:consumers will be able to purchase more of the good after the price ceiling is imposed.
C:it will not be binding.
Droducers will respond to the lower price and therefore offer more units for sale.
4.The government imposes a price ceiling below the equilibrium price. The price ceiling will cause:
A:quantity demanded to decrease.
B:quantity supplied to increase.
C:an increase in the quality of the good.
D:a shortage of the good.
5.Which of the following is an example of a black market?
A: waiting in line during the gasoline shortages of the 1970s
B:a tenant in a rent-controlled apartment subletting at a higher rent
C:the oil market
D:the purchase of an inferior radio at a department store
6.Suppose the government of the oil-rich country of Oiland sets gasoline prices at $0.25 per gallon, when the market price is $1.50. The Oiland government's actions will:
A:improve equality between rich and poor since the poor can now afford gasoline.
B:cause gasoline shortages even in an oil-rich country.
C:improve efficiency since the low prices will force producers to find cheaper production methods.
D:result in gasoline surpluses even in an oil-rich country.
7.If the government feels that a price in the market is too high for the ________, it can impose a ________.
A:consumers; price floor
Broducers; price ceiling
Croducers; price floor
D:consumers; price ceiling
8.To be binding, a price ceiling must be set at a price:
A:at which quantity demanded exceeds quantity supplied.
B:lower than the equilibrium price.
C:higher than the equilibrium price.
D:lower than the equilibrium price or at a price at which quantity demanded exceeds quantity supplied.
9.Black markets may develop with price controls because:
A:quantity demanded equals quantity supplied at the mandated price.
B:individuals cannot profit by illegal exchanges.
Crice controls increase efficiency.
D:individuals can profit by illegal exchanges.
10.West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States:
A:raises the world price of cotton.
B:has led to an increase in the demand for West African cotton.
C:has led to a global shortage of cotton.
D:leads to global cotton surpluses and lower prices for West African farmers.
11. The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus:
A:the U.S. government holds auctions to sell the surplus to the highest bidder.
B:the U.S. government typically pays farmers to produce as much as possible.
C:the U.S. government, in some cases, has destroyed the surplus production.
D:the European Union pays farm exporters to sell products for a profit overseas.
12. Suppose the government sets a price floor of $2.85 per bushel on corn when the current price is $2.55. This price floor will:
A:increase the supply of corn.
B:cause a shortage of corn.
C:cause a surplus of corn.
D:have no effect on the price of corn.
13.If New York City had no medallion system for taxicabs, the price of a taxicab ride would:
A:increase, but only slightly.
B:increase because of the higher safety hazards.
C:decrease.
D:not change from its current level.
14.The quota rent refers to:
A:the difference between the demand price and the supply price at the quota limit.
B:the rent received by landlords who own rent-controlled apartments.
C:the opportunity cost of using a quota-controlled service, or of buying a good that is subject to an import quota.
D:the minimum rent that the owner of a building must receive before he or she is willing to rent out the building.
A:increase efficiency.
B: keep prices low.
C:increase the quality of the good.
D
revent shortages. 2.Rapidly increasing health costs have been a major political concern since at least 1992. Suppose that to control rising health costs the government sets the maximum price for a normal doctor's visit at $20, but the current market price is $40. Then:
A:fewer people will try to see the doctor, and the doctors will see fewer patients.
B:more people will be able to see the doctor, since the price is lower.
C:more people will try to visit the doctor, but the doctor will see fewer patients.
D:the same number of people will try to visit the doctor, and the doctor will see the same number of patients.
3.The government decides to impose a price ceiling on a good, because it thinks the market-determined price is “too high.” If the government imposes the price ceiling below the equilibrium price:
A:consumers will respond to the lower price and therefore wish to purchase more of the good than at the equilibrium price.
B:consumers will be able to purchase more of the good after the price ceiling is imposed.
C:it will not be binding.
D
roducers will respond to the lower price and therefore offer more units for sale. 4.The government imposes a price ceiling below the equilibrium price. The price ceiling will cause:
A:quantity demanded to decrease.
B:quantity supplied to increase.
C:an increase in the quality of the good.
D:a shortage of the good.
5.Which of the following is an example of a black market?
A: waiting in line during the gasoline shortages of the 1970s
B:a tenant in a rent-controlled apartment subletting at a higher rent
C:the oil market
D:the purchase of an inferior radio at a department store
6.Suppose the government of the oil-rich country of Oiland sets gasoline prices at $0.25 per gallon, when the market price is $1.50. The Oiland government's actions will:
A:improve equality between rich and poor since the poor can now afford gasoline.
B:cause gasoline shortages even in an oil-rich country.
C:improve efficiency since the low prices will force producers to find cheaper production methods.
D:result in gasoline surpluses even in an oil-rich country.
7.If the government feels that a price in the market is too high for the ________, it can impose a ________.
A:consumers; price floor
B
roducers; price ceiling C
roducers; price floor D:consumers; price ceiling
8.To be binding, a price ceiling must be set at a price:
A:at which quantity demanded exceeds quantity supplied.
B:lower than the equilibrium price.
C:higher than the equilibrium price.
D:lower than the equilibrium price or at a price at which quantity demanded exceeds quantity supplied.
9.Black markets may develop with price controls because:
A:quantity demanded equals quantity supplied at the mandated price.
B:individuals cannot profit by illegal exchanges.
C
rice controls increase efficiency. D:individuals can profit by illegal exchanges.
10.West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States:
A:raises the world price of cotton.
B:has led to an increase in the demand for West African cotton.
C:has led to a global shortage of cotton.
D:leads to global cotton surpluses and lower prices for West African farmers.
11. The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus:
A:the U.S. government holds auctions to sell the surplus to the highest bidder.
B:the U.S. government typically pays farmers to produce as much as possible.
C:the U.S. government, in some cases, has destroyed the surplus production.
D:the European Union pays farm exporters to sell products for a profit overseas.
12. Suppose the government sets a price floor of $2.85 per bushel on corn when the current price is $2.55. This price floor will:
A:increase the supply of corn.
B:cause a shortage of corn.
C:cause a surplus of corn.
D:have no effect on the price of corn.
13.If New York City had no medallion system for taxicabs, the price of a taxicab ride would:
A:increase, but only slightly.
B:increase because of the higher safety hazards.
C:decrease.
D:not change from its current level.
14.The quota rent refers to:
A:the difference between the demand price and the supply price at the quota limit.
B:the rent received by landlords who own rent-controlled apartments.
C:the opportunity cost of using a quota-controlled service, or of buying a good that is subject to an import quota.
D:the minimum rent that the owner of a building must receive before he or she is willing to rent out the building.