Deck 6: True False

Question 1

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Answer 1

False

Question 2

Price is the rationing mechanism in a free,competitive market.

Answer 2

True

Question 3

When free markets ration goods with prices,it is both efficient and impersonal.

Answer 3

True

Question 4

A price ceiling set below the equilibrium price is binding.

Question 5

Prices are inefficient rationing devices.

Question 6

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Question 7

Economic policies often have effects that their architects did not intend or anticipate.

Question 8

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Question 9

At the equilibrium price,the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Question 10

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Question 11

If a price ceiling is not binding,then it will have no effect on the market.

Question 12

A price ceiling set below the equilibrium price is nonbinding.

Question 13

Price controls can generate inequities.

Question 14

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Question 15

If a good or service is sold in a competitive market free of government regulation,then the price of the good or service adjusts to balance supply and demand.

Question 16

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Question 17

To be binding,a price ceiling must be set above the equilibrium price.

Question 18

A price ceiling set above the equilibrium price is not binding.

Question 19

A price ceiling is a legal minimum on the price at which a good or service can be sold.

Question 20

When a free market for a good reaches equilibrium,anyone who is willing and able to sell at the market price can sell the good.

Question 21

Price ceilings are typically imposed to benefit buyers.

Question 22

If a price ceiling of $2 per gallon is imposed on gasoline,and the market equilibrium price is $1.50,then the price ceiling is a binding constraint on the market.

Question 23

When the government imposes a binding price ceiling on a competitive market,a surplus of the good arises,and sellers must ration the scarce goods among the large number of potential buyers.

Question 24

One common example of a price ceiling is rent control.

Question 25

A price ceiling set above the equilibrium price causes a surplus in the market.

Question 26

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Question 27

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Question 28

A price ceiling caused the gasoline shortage of 1973 in the United States.

Question 29

A price ceiling set below the equilibrium price causes a shortage in the market.

Question 30

A binding price ceiling may not help all consumers,but it does not hurt any consumers.

Question 31

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Question 32

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Question 33

If a price ceiling of $1.50 per gallon is imposed on gasoline,and the market equilibrium price is $2,then the price ceiling is a binding constraint on the market.

Question 34

Price ceilings are typically imposed to benefit sellers.

Question 35

All buyers benefit from a binding price ceiling.

Question 36

When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.

Question 37

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Question 38

The goal of rent control is to help the poor by making housing more affordable.

Question 39

A binding price ceiling causes a shortage in the market.

Question 40

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Question 41

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Question 42

A binding price floor causes a shortage in the market.

Question 43

A price floor set below the equilibrium price causes a surplus in the market.

Question 44

When a binding price floor is imposed on a market for a good,some people who want to sell the good cannot do so.

Question 45

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Question 46

A binding price floor causes quantity supplied to be less than quantity demanded.

Question 47

If a price floor is not binding,then it will have no effect on the market.

Question 48

A price floor is a legal minimum on the price at which a good or service can be sold.

Question 49

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Question 50

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Question 51

Because the supply and demand of housing are inelastic in the short run,the initial shortage caused by rent control is large.

Question 52

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Question 53

The primary effect of rent control in the short run is to reduce rents.

Question 54

A price floor set above the equilibrium price causes a surplus in the market.

Question 55

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Question 56

The effects of rent control in the long run include lower rents and lower-quality housing.

Question 57

To be binding,a price floor must be set above the equilibrium price.

Question 58

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Question 59

A price floor set above the equilibrium price is not binding.

Question 60

A price floor set above the equilibrium price is binding.

Question 61

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Question 62

Figure 6-35
Refer to Figure 6-35.A price floor set at $60 would create a surplus of 20 units.

Question 63

Figure 6-35
Refer to Figure 6-35.A price ceiling set at $30 would create a shortage of 20 units.

Question 64

A binding price floor may not help all sellers,but it does not hurt any sellers.

Question 65

Workers determine the supply of labor,and firms determine the demand for labor.

Question 66

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Question 67

States in the U.S.may mandate minimum wages above the federal level.

Question 68

The United States is the only country in the world with minimum-wage laws.

Question 69

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Question 70

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

Question 71

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Question 72

One common example of a price floor is the minimum wage.

Question 73

Price floors are typically imposed to benefit sellers.

Question 74

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

Question 75

Figure 6-35
Refer to Figure 6-35.A price ceiling set at $70 would create a shortage of 40 units.

Question 76

The economy contains many labor markets for different types of workers.

Question 77

The rationing mechanisms that develop under binding price floors are usually efficient.

Question 78

Price floors are typically imposed to benefit buyers.

Question 79

Not all sellers benefit from a binding price floor.

Question 80

Figure 6-35
Refer to Figure 6-35.A price floor set at $40 would create a surplus of 20 units.