Question 1

If a binding price floor is imposed on the video game market,then

Accepted Answer

A binding price floor is a minimum price that must be paid for a good or service. If a binding price floor is imposed on the video game market, it means that the price of video games cannot go below a certain level. As a result, video game producers will have to increase the price of their products to meet the new minimum price. This will lead to a decrease in the quantity demanded of video games, as consumers may choose to buy fewer video games at the higher price. At the same time, video game producers may increase their production to take advantage of the higher price. This means that the supply of video games will increase. However, since the demand has decreased due to the higher price, there will be a surplus of video games in the market. Therefore, choice C is correct – a surplus of video games will develop.

Question 2

A price floor is binding when it is set

Accepted Answer

The answer of A price floor is binding when it...

Question 3

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

When a binding price floor is imposed on a market to benefit sellers, it creates a situation where the price of the good is set above the equilibrium price. This means that some buyers who were willing to pay the equilibrium price will no longer be able to afford the good at the higher price. As a result, some sellers will not be able to sell any amount of the good. Therefore, only some sellers benefit from the price floor, while others are negatively affected.

Question 4

A binding price floor will reduce a firm's total revenue

Accepted Answer

When demand is elastic, a price floor will cause the quantity demanded to decrease significantly, leading to a greater decrease in total revenue for the firm than the increase in revenue from the higher price. However, if demand is inelastic, the decrease in quantity demanded will be small, leading to a possible increase in total revenue for the firm despite the price floor. Therefore, a binding price floor will reduce a firm's total revenue when demand is elastic, but not necessarily when demand is inelastic.

Question 5

Figure 6-3

-Refer to Figure 6-3.In panel (b),there will be

Accepted Answer

The answer of Figure 6-3

-Refer to Figure 6-3.In panel (b),there...

Question 6

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

When a binding price floor is imposed on a market to benefit sellers, some sellers benefit by being able to sell their goods at a higher price, while others may not benefit and may even be harmed as the higher price may result in a decrease in demand for the goods, leading to a surplus. Therefore, some sellers benefit and some sellers are harmed.

Question 7

When a binding price floor is imposed on a market,

Accepted Answer

The answer of When a binding price floor is imposed...

Question 8

When a binding price floor is imposed on a market,

Accepted Answer

When a binding price floor is imposed on a market, it means that the price cannot fall below a certain level. This causes a surplus in the market as the quantity supplied exceeds the quantity demanded at that price. Since price no longer serves as a rationing device in this situation, it is less efficient in allocating resources and can lead to wasteful production and unused goods. Option B is incorrect because the quantity demanded at the price floor is actually lower than the quantity demanded without the price floor. Option C is incorrect because while some sellers may benefit, others may suffer due to the surplus in the market.

Question 9

If the government removes a binding price floor from a market,then the price received by sellers will

Accepted Answer

If the government removes a binding price floor from a market, the price will decrease because sellers will have to lower their prices in order to sell their goods. However, this lower price will make the goods more attractive to buyers, which will increase the quantity sold in the market. Therefore, the price will decrease and the quantity sold in the market will increase.

Question 10

Figure 6-3

-Refer to Figure 6-3.A nonbinding price floor is shown in

Accepted Answer

Panel (a) shows a nonbinding price floor, which means the equilibrium price is already above the floor, and the policy has no effect on the market. Panel (b) shows a binding price floor, where the floor is set above the equilibrium price, creating a surplus of supply and a shortage of demand.

Question 11

A surplus results when a

Accepted Answer

A surplus occurs when a binding price floor is imposed on a market, as it sets the price above the equilibrium level, leading to more supply than demand at that price.

Question 12

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

The answer of An outcome that can result from either...

Question 13

Figure 6-3

-Refer to Figure 6-3.In panel (a),there will be

Accepted Answer

In panel (a), the supply and demand curves intersect at the equilibrium point, indicating that the quantity of wheat supplied is equal to the quantity of wheat demanded. Therefore, there will be no shortage or surplus of wheat in the market.

Question 14

If a binding price floor is imposed on the video game market,then

Accepted Answer

The answer of If a binding price floor is imposed...

Question 15

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

Accepted Answer

With a price floor of $3, the price is set above the equilibrium price of $2. This means that the quantity demanded of toothpaste will decrease, as consumers will be less willing to pay the higher price. However, the quantity of toothpaste that firms want to supply increases, because they are now able to charge a higher price and earn greater profits. This creates a surplus in the market, as there is now more toothpaste supplied than demanded.

Question 16

To say that a price floor is binding is to say that the price floor

Accepted Answer

The answer of To say that a price floor is...

Question 17

If the government removes a binding price floor from a market,then the price paid by buyers will

Accepted Answer

Removing a binding price floor typically leads to a decrease in price, as the market moves towards equilibrium, and an increase in the quantity sold, as more consumers are willing to buy the product at the lower price.

Question 18

The imposition of a binding price floor on a market causes quantity demanded to be

Accepted Answer

When a binding price floor is imposed, the price of the good or service is set above the market equilibrium price. This creates a situation where the quantity supplied exceeds the quantity demanded at the higher price, resulting in a surplus. Therefore, quantity demanded will be less than quantity supplied.

Question 19

If a price floor is a binding constraint on a market,then

Accepted Answer

The answer of If a price floor is a binding...

Question 20

Figure 6-3

-Refer to Figure 6-3.A binding price floor is shown in

Accepted Answer

The answer of Figure 6-3

-Refer to Figure 6-3.A binding price...

Quiz 6: Supply,demand,and Government Policies

If a binding price floor is imposed on the video game market,then

A price floor is binding when it is set

When a binding price floor is imposed on a market to benefit sellers,

A binding price floor will reduce a firm's total revenue

Figure 6-3 -Refer to Figure 6-3.In panel (b) ,there will be

When a binding price floor is imposed on a market to benefit sellers,

When a binding price floor is imposed on a market,

When a binding price floor is imposed on a market,

If the government removes a binding price floor from a market,then the price received by sellers will

Figure 6-3 -Refer to Figure 6-3.A nonbinding price floor is shown in

A surplus results when a

An outcome that can result from either a price ceiling or a price floor is

Figure 6-3 -Refer to Figure 6-3.In panel (a) ,there will be

If a binding price floor is imposed on the video game market,then

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

To say that a price floor is binding is to say that the price floor

If the government removes a binding price floor from a market,then the price paid by buyers will

The imposition of a binding price floor on a market causes quantity demanded to be

If a price floor is a binding constraint on a market,then

Figure 6-3 -Refer to Figure 6-3.A binding price floor is shown in