Question 1

Rapidly increasing health costs have been a major political concern since at least 1992.Suppose the government sets the maximum price for a normal doctor's visit at $20 to control rising health costs but the current market price is $40.What will happen?
A.More people will try to visit the doctor, but there will be fewer doctors willing to see patients at that price.
B.The same number of people will try to visit the doctor, and the same number of doctors are willing to see patients at that price.
C.More people will be able to see the doctor, since the price is lower.
D.Fewer people will try to see the doctor, and fewer doctors are willing to see patients at that price.

Accepted Answer

More people will try to visit the doctor, but there will be fewer doctors willing to see patients at that price.

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

When the government imposes a price ceiling below the equilibrium price, it creates a situation where the quantity demanded exceeds the quantity supplied. This leads to a shortage of the good, as consumers try to buy more of the product, but producers are unwilling to supply it at the artificially low price. The other choices are not accurate as a price ceiling does not directly impact demand or the quality of the good, and it is unlikely to increase supply.

Question 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 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

When a price ceiling is set below the equilibrium price, it makes the good cheaper than what the market has determined, leading consumers to want to buy more of it because they are getting it at a lower price than they would under equilibrium conditions. Producers, on the other hand, will be less willing to supply the good at the lower price, leading to a shortage.

Question 4

If the government feels that a price in the market is too high for , it can impose a
________.
A.consumers; price ceiling
B.consumers; price floor
C.producers; price ceiling
D.producers; price floor

Accepted Answer

The answer of If the government feels that a price...

Question 5

Suppose that the average cost of a doctor's visit is $100.If the government imposes a price ceiling of $50 on the cost of a doctor's visit, there will be:
A.an excess supply of doctor's visits.
B.an excess demand for doctor's visits.
C.an increase in the equilibrium number of doctor's visits.
D.no change in the number of doctor's visits.

Accepted Answer

The answer of Suppose that the average cost of a...

Question 6

A binding price ceiling is designed to:
A.keep prices low.
B.increase the quality of the good.
C.prevent shortages.
D.increase efficiency.

Accepted Answer

The answer of A binding price ceiling is designed to:
A.keep...

Question 7

Table: Market for Apartments
(Table: Market for Apartments) Look at the table Market for Apartments.If a government price ceiling of $700 is imposed on this market, an inefficiency will result in the form of a:
A.surplus of 0.6 million apartments.
B.shortage of 0.6 million apartments.
C.surplus of 0.2 million apartments.
D.shortage of 0.2 million apartments.

Accepted Answer

The answer of Table: Market for Apartments
(Table: Market for Apartments)...

Question 8

The NFL wants to give the "common fan" the opportunity to attend the Super Bowl, so it sets Super Bowl prices "low"-tickets for a regular seat at Super Bowl XXXVII cost just $400.Scalpers, however, sell tickets for $1,500 or more.If there are no transaction costs to selling a ticket, the true cost of a regular ticket to Super Bowl XXXVII is:
A.at most $400.
B.at least $1,500.
C.the monetary price paid to obtain the ticket.
D.$1,100 less than the opportunity cost of a ticket.

Accepted Answer

The answer of The NFL wants to give the "common...

Question 9

A price ceiling will have no 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

The answer of A price ceiling will have no effect...

Question 10

(Table: Market for Fried Twinkies) Look at the table The Market for Fried Twinkies.In response to popular anger over the high price of fried Twinkies and the extreme wealth of fried Twinkie producers, the government imposes a price ceiling of $1.20 per fried Twinkie.From this table, the price ceiling causes:
A.a shortage of 3,000 fried Twinkies.
B.a shortage of 5,000 fried Twinkies.
C.a surplus of 8,000 fried Twinkies.
D.a surplus of 3,000 fried Twinkies.

Accepted Answer

The answer of (Table: Market for Fried Twinkies) Look at...

Question 11

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $0.50 per can of soda, there will be:
A.a shortage of 2 cans.
B.a shortage of 3 cans.
C.a surplus of 3 cans.
D.equilibrium in the market for soda.

Accepted Answer

The answer of (Table: The Market for Soda) Look at...

Question 12

Suppose the Jamaican government sets coffee prices at $1 per pound, when the market price is $10.The government's actions will:
A.improve efficiency, since the low prices will force producers to find cheaper production methods.
B.result in coffee surpluses even in a coffee-rich country.
C.cause coffee shortages even in a coffee-rich country.
D.improve equality between rich and poor, since the poor can now afford coffee.

Accepted Answer

The answer of Suppose the Jamaican government sets coffee prices...

Question 13

Table: Market for Apartments
(Table: Market for Apartments) Look at the table Market for Apartments.If a government price ceiling of $600 is imposed on this market, an inefficiency will result in the form of a:
A.surplus of 0.6 million apartments.
B.surplus of 0.8 million apartments.
C.shortage of 0.8 million apartments.
D.shortage of 0.6 million apartments.

Accepted Answer

The answer of Table: Market for Apartments
(Table: Market for Apartments)...

Question 14

(Table: The Market for Soda) Look at the table The Market for Soda.If the government does not impose a price control, the price of a can of soda will equal: 
A.$0.50.
B.$0.75.
C.$1.00.
D.$1.25.

Accepted Answer

The answer of  (Table: The Market for Soda) Look...

Question 15

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $1.00 per can of soda, the quantity of soda demanded will be:
A.10 cans.
B.8 cans.
C.6 cans.
D.4 cans.

Accepted Answer

The answer of (Table: The Market for Soda) Look at...

Question 16

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $0.50 per can of soda, the quantity of soda demanded will be:
A.10 cans.
B.8 cans.
C.6 cans.
D.4 cans.

Accepted Answer

The answer of (Table: The Market for Soda) Look at...

Question 17

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $1.00 per can of soda, the quantity of soda supplied will be: 7

Accepted Answer

The answer of   (Table: The Market for Soda)...

Question 18

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

Accepted Answer

When rent controls are put in place, the price ceiling is set below the equilibrium price. This means that there is excess demand for rental units at the lower regulated price, resulting in more people wanting to rent apartments than the number of available units. This will lead to competition among tenants and frustration among landlords. Eventually, a shortage of rental units will emerge as landlords find it difficult to cover their costs and maintain their properties. Therefore, quantity demanded will exceed the quantity supplied. Rent controls create a situation where the price is below the equilibrium price, which leads to an increase in demand and a decrease in supply. This leads to a shortage of rental units, as quantity demanded exceeds quantity supplied.

Question 19

Table: Market for Apartments
(Table: Market for Apartments) Look at the table Market for Apartments.If a government price ceiling of $900 is imposed on this market, an inefficiency will result in the form of a:
A.surplus of 0.6 million apartments.
B.shortage of 0.6 million apartments.
C.surplus of 0.2 million apartments.
D.shortage of 0.2 million apartments.

Accepted Answer

The answer of Table: Market for Apartments
(Table: Market for Apartments)...

Question 20

A price control is:
A.when a firm controls the price of the good it produces.
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 placed on the sale of a good which controls the market price.

Accepted Answer

The answer of A price control is:
A.when a firm controls...

Quiz 5: Price Controls and Quotas: Meddling With Markets

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.

If the government feels that a price in the market is too high for , it can impose a ________. A.consumers; price ceiling B.consumers; price floor C.producers; price ceiling D.producers; price floor

A binding price ceiling is designed to: A.keep prices low. B.increase the quality of the good. C.prevent shortages. D.increase efficiency.

A price ceiling will have no 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.

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $0.50 per can of soda, there will be: A.a shortage of 2 cans. B.a shortage of 3 cans. C.a surplus of 3 cans. D.equilibrium in the market for soda.

(Table: The Market for Soda) Look at the table The Market for Soda.If the government does not impose a price control, the price of a can of soda will equal: A.$0.50. B.$0.75. C.$1.00. D.$1.25.

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $1.00 per can of soda, the quantity of soda demanded will be: A.10 cans. B.8 cans. C.6 cans. D.4 cans.

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $0.50 per can of soda, the quantity of soda demanded will be: A.10 cans. B.8 cans. C.6 cans. D.4 cans.

(Table: The Market for Soda) Look at the table The Market for Soda.If the government imposes a price ceiling of $1.00 per can of soda, the quantity of soda supplied will be: 7

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

A price control is: A.when a firm controls the price of the good it produces. 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 placed on the sale of a good which controls the market price.