Deck 6: Supply, Demand, and Government Policies

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

Price controls can generate inequities.

Question 11

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

Question 12

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

Question 13

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

Question 14

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 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 binding price ceiling causes a shortage in the market.

Question 17

A price ceiling set below the equilibrium price is binding.

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

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

Question 21

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

Question 22

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 23

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

Question 24

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

Question 25

All buyers benefit from a binding price ceiling.

Question 26

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 27

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

Question 28

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

Question 29

Prices are inefficient rationing devices.

Question 30

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

Question 31

Price ceilings are typically imposed to benefit buyers.

Question 32

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

Question 33

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

Question 34

One common example of a price ceiling is rent control.

Question 35

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

Question 36

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 37

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

Question 38

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

Question 39

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 40

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 41

A binding price floor causes a shortage in the market.

Question 42

Price floors are typically imposed to benefit buyers.

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

Not all sellers benefit from a binding price floor.

Question 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

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

Question 54

A price floor set below the equilibrium price is binding.

Question 55

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 56

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

Question 57

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

Question 58

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

Question 59

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

Question 60

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

Question 61

A binding minimum wage may not help all workers,but it does not hurt any workers.

Question 62

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

Question 63

The minimum wage has its greatest impact on the market for teenage labor.

Question 64

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 65

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

Question 66

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

Question 67

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 68

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

Question 69

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

Question 70

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 71

Workers with high skills and much experience are not typically affected by the minimum wage.

Question 72

A binding minimum wage raises the incomes of those workers who have jobs,but it lowers the incomes of workers who cannot find jobs.

Question 73

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

Question 74

In the labor markets,workers determine the supply of labor and firms determine the demand.

Question 75

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

Question 76

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

Question 77

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Question 78

The minimum wage is more often binding for teenagers than for other members of the labor force.

Question 79

The impact of the minimum wage depends on the skill and experience of the worker.

Question 80

A binding minimum wage creates unemployment.