Question 1

Rapidly increasing child daycare costs have been a major political concern since well before 1992.Suppose that the government sets the maximum price for daily child daycare expenses at $20 per day,but the current market price is $40 per day.What is MOST likely to happen?
A) More people will try to get access to the lower-cost child daycare,but there will be fewer daycares with spots available at that price.
B) The same number of people will try to get access to daycare,and the same number of childcare centres are willing to accept them at that price.
C) More people will have access to daycare,since the price is lower.
D) Fewer people will try to enrol their children in daycare,and fewer daycare centres will be accepting new children at that price.

Accepted Answer

When the maximum price is set at $20 per day, more people would want to access the lower-cost daycare service, which would increase demand. However, since the price ceiling is lower than the current market price, fewer daycare centres will be willing to accept children at the lower price, leading to a shortage of spots available at that price. Therefore, option A is the most likely outcome.

Question 2

The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:
A) demand to decrease.
B) supply to increase.
C) a shortage of the good.
D) an increase in the quality of the good.

Accepted Answer

A price ceiling below the equilibrium price causes the quantity demanded to exceed the quantity supplied, resulting in a shortage of the good. The other options (A, B, and D) are incorrect because the price ceiling does not affect demand, supply, or quality, but rather restricts the price that can be charged for the good.

Question 3

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.Without rent controls,the equilibrium quantity is: A) Q₄. B) Q₁. C) Q₂. D) Q₃.

Accepted Answer

The equilibrium quantity is where the supply and demand curves intersect, which is represented by Q₂ in the given options.

Question 4

Use the following to answer questions : $$\begin{array}{l}
\text { Table: The Market for Pop }\
\begin{array} { l c c } 
\hline &  { \text { Market for a Can of Pop } } \
 \begin{array} { l } 
\text { Price } \
\text { (\$/unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (cans) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (cans) }
\end{array} \
\hline 0.50 & 10 & 7 \
0.75 & 8 & 8 \
1.00 & 6 & 9 \
1.25 & 4 & 10 \
1.50 & 2 & 11
\end{array}
\end{array}$$
-(Table: The Market for Pop)Use Table: The Market for Pop.If the government imposes a price ceiling of $0.50 per can of pop the quantity of pop demanded will be _____ cans.
A) 10
B) 8
C) 6
D) 4

Accepted Answer

The answer of Use the following to answer questions :...

Question 5

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₀,renters would be willing to pay a price at least as high as: A) Rent₄ for Q₀ units. B) Rent₄ for Q₁ units. C) Rent₃ for Q₁ units. D) No one would be willing to pay a higher actual price than Rent₀.

Accepted Answer

Rent controls set below the equilibrium price create a shortage, leading to a higher willingness to pay by renters to secure the limited available units.

Question 6

Use the following to answer questions : $$\begin{array}{l}
\text { Table: The Market for Pop }\
\begin{array} { l c c } 
\hline &  { \text { Market for a Can of Pop } } \
 \begin{array} { l } 
\text { Price } \
\text { (\$/unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (cans) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (cans) }
\end{array} \
\hline 0.50 & 10 & 7 \
0.75 & 8 & 8 \
1.00 & 6 & 9 \
1.25 & 4 & 10 \
1.50 & 2 & 11
\end{array}
\end{array}$$
-(Table: The Market for Pop)Use Table: The Market for Pop.If the government does NOT impose a price control,the price of a can of pop will equal:
A) $0.50.
B) $0.75.
C) $1.00.
D) $1.25.

Accepted Answer

The answer of Use the following to answer questions :...

Question 7

The government decides to impose a price ceiling on a good because it thinks that 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 wish to purchase more of the good than at the equilibrium price.
B) producers will respond to the lower price and offer more units for sale.
C) consumers will be able to purchase more of the good after the price ceiling is imposed.
D) it will not be binding.

Accepted Answer

The answer of The government decides to impose a price...

Question 8

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₀: A) the shortage of rental units is the distance Q₁-Q₃. B) some renters will be willing to pay a price as high as Rent₄ for Q₀ units. C) no one will have to pay a higher actual price than Rent₀,nor will anyone be willing to do so. D) there will be a surplus of rental units.

Accepted Answer

The answer of Use the following to answer questions :...

Question 9

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.Without rent controls,the equilibrium rent is: A) Rent₄. B) Rent₁. C) Rent₂. D) Rent₃.

Accepted Answer

Without rent controls, the equilibrium rent is determined by the intersection of the supply and demand curves, which is represented by option C.

Question 10

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₁: A) the shortage of rental units is the distance Q₃-Q₁. B) some renters will be willing to pay a price as high as Rent₄ for Q₁ units. C) no one will have to pay a higher actual price than Rent₀,nor will anyone be willing to do so. D) there will be a surplus of rental units,but it is impossible to tell how large the surplus is based on the information provided.

Accepted Answer

The answer of Use the following to answer questions :...

Question 11

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₃: A) the shortage of rental units is the distance Q₃-Q₁. B) some renters will be willing to pay a price as high as Rent₄ for Q₃ units. C) no one will have to pay a higher actual price than Rent₀,nor will anyone be willing to do so. D) rent will remain at Rent₂.

Accepted Answer

The answer of Use the following to answer questions :...

Question 12

Rent controls set a price ceiling below the equilibrium price,and therefore:
A) quantity supplied exceeds the quantity demanded.
B) quantity demanded exceeds the quantity supplied.
C) a surplus of rental units will result.
D) all poor people will be helped.

Accepted Answer

When rent controls set a price ceiling below the equilibrium price, quantity demanded exceeds the quantity supplied. This leads to a shortage of rental units because landlords are not willing to supply enough units at the lower price, and renters are willing to demand more units at the lower price. Therefore, rent controls may not necessarily help poor people by increasing the availability of affordable housing.

Question 13

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₁: A) rental apartments may be of inefficiently low quality. B) there will be an efficient allocation of rentals. C) some landlords may break the law by renting below the mandated price. D) new apartments will be constructed.

Accepted Answer

Rent controls set below the equilibrium rent (Rent₁) will create a shortage of rental apartments, as quantity demanded will exceed quantity supplied. Landlords may respond to this shortage by reducing the quality of their apartments to keep their costs low. This leads to inefficiently low quality apartments.

Question 14

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.Suppose that rent controls are imposed.If the government wanted a rent control ceiling to be effective immediately,what is one possible price to set? A) Rent₃ B) Rent₄ C) Rent₁ D) Rent₂

Accepted Answer

For a rent control ceiling to be effective immediately, it must be set below the current market equilibrium price. Choice C represents a price below the equilibrium, making it an effective rent control price.

Question 15

The market for apples is in equilibrium at a price of $0.50 per kilogram.If the government imposes a price floor in the market at a price of $0.40 per kilogram:
A) quantity demanded will decrease.
B) quantity supplied will increase.
C) there will be a shortage of apples.
D) the price floor will not affect the market price or output.

Accepted Answer

The answer of The market for apples is in equilibrium...

Question 16

Suppose that the CFL wants to give the "common fan" the opportunity to attend the Grey Cup,so it sets Grey Cup prices "low"-let's say that they set ticket prices for a regular seat at the Grey Cup to cost just $100.People who have tickets,however,can turn around and sell them online for $1 000 or more.If there are no transaction costs for fans with tickets to sell them,the true cost to a fan of attending the Grey Cup is:
A) at most $100.
B) at least $1 000.
C) the monetary price paid to obtain the ticket.
D) $900 less than the opportunity cost of a ticket.

Accepted Answer

The true cost of attending the Grey Cup for a common fan is the opportunity cost of $1 000 or more, as they potentially could have sold the ticket for that price. Despite the low ticket price of $100 offered by the CFL, the secondary market allows those with tickets to sell them for a much higher price.

Question 17

A price ceiling will have NO immediate effect if:
A) it is set above the equilibrium price.
B) the equilibrium price is above the price ceiling.
C) it is set below the equilibrium price.
D) it creates a shortage.

Accepted Answer

If a price ceiling is set above the equilibrium price, it will have no effect on the market as the market is already operating at a price lower than the price ceiling. A price ceiling only creates an effect if it is set below the equilibrium price, creating a shortage.

Question 18

A binding price ceiling is usually designed to:
A) keep prices below the equilibrium level.
B) increase the quality of the good.
C) prevent shortages.
D) increase efficiency.

Accepted Answer

A binding price ceiling is a government-imposed limit on how high the price of a good or service can be charged. It is usually set below the market equilibrium price in order to keep prices affordable for consumers, but this can lead to shortages as suppliers are unable or unwilling to provide the same amount of goods or services at a lower price. Therefore, the main purpose of a binding price ceiling is to keep prices below the equilibrium level.

Question 19

A price control is:
A) control of the price of a good by the firm that produces it.
B) a legal restriction on how high or low a price in a market may go.
C) an upper limit on the quantity of some good that can be bought or sold.
D) a tax on the sale of a good that controls the market price.

Accepted Answer

A price control is a legal restriction on how high or low a price in a market may go. This can take the form of a price ceiling, which sets the maximum price that can be charged for a good or service, or a price floor, which sets the minimum price that must be paid. Price controls are often used by governments to try to make goods more affordable or to prevent prices from rising too rapidly. However, price controls can also create shortages, reduce quality, and discourage investment and innovation in the affected industries.

Question 20

Use the following to answer questions : -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are imposed and the government wants them to be immediately effective,they will most likely be set at either _____ or _____. A) Rent₀;Rent₁ B) Rent₁;Rent₃ C) Rent₃;Rent₄ D) Rent₂;Rent₄

Accepted Answer

The answer of Use the following to answer questions :...

Quiz 5: Price Controls and Quotas

Rapidly increasing child daycare costs have been a major political concern since well before 1992.Suppose that the government sets the maximum price for daily child daycare expenses at $20 per day,but the current market price is $40 per day.What is MOST likely to happen?

The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.Without rent controls,the equilibrium quantity is:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₀,renters would be willing to pay a price at least as high as:

The government decides to impose a price ceiling on a good because it thinks that the market-determined price is too high.If the government imposes the price ceiling below the equilibrium price:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₀:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.Without rent controls,the equilibrium rent is:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₁:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₃:

Rent controls set a price ceiling below the equilibrium price,and therefore:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₁:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.Suppose that rent controls are imposed.If the government wanted a rent control ceiling to be effective immediately,what is one possible price to set?

The market for apples is in equilibrium at a price of $0.50 per kilogram.If the government imposes a price floor in the market at a price of $0.40 per kilogram:

A price ceiling will have NO immediate effect if:

A binding price ceiling is usually designed to:

A price control is:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are imposed and the government wants them to be immediately effective,they will most likely be set at either _ or _.

Quiz 5: Price Controls and Quotas

Rapidly increasing child daycare costs have been a major political concern since well before 1992.Suppose that the government sets the maximum price for daily child daycare expenses at $20 per day,but the current market price is $40 per day.What is MOST likely to happen?

The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.Without rent controls,the equilibrium quantity is:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent0,renters would be willing to pay a price at least as high as:

The government decides to impose a price ceiling on a good because it thinks that the market-determined price is too high.If the government imposes the price ceiling below the equilibrium price:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent0:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.Without rent controls,the equilibrium rent is:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent1:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent3:

Rent controls set a price ceiling below the equilibrium price,and therefore:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent1:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.Suppose that rent controls are imposed.If the government wanted a rent control ceiling to be effective immediately,what is one possible price to set?

The market for apples is in equilibrium at a price of $0.50 per kilogram.If the government imposes a price floor in the market at a price of $0.40 per kilogram:

A price ceiling will have NO immediate effect if:

A binding price ceiling is usually designed to:

A price control is:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are imposed and the government wants them to be immediately effective,they will most likely be set at either _____ or _____.

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₀,renters would be willing to pay a price at least as high as:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₀:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₁:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₃:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are set at Rent₁:

Use the following to answer questions : -(Figure: Rent Controls) Use Figure: Rent Controls.If rent controls are imposed and the government wants them to be immediately effective,they will most likely be set at either _ or _.