ECON 103 Lecture Notes - Lecture 7: Price Ceiling, Price Floor
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Question 1
The shortage in apartments causes by rent control is worse...
In the long-run, because the long-run supply is more elastic. | ||
In the long-run, because the long-run supply is less elastic. | ||
In the short-run, because the short-run supply is more elastic. | ||
In the short-run, because the short-run supply is less elastic. |
2 points
Question 2
Airline regulation of the 1970s produced a similar result to which of the following government interventions?
Communism | ||
Rent control laws | ||
The Affordable Care Act | ||
Minimum wage laws |
2 points
Question 3
What is a price floor?
A maximum price allowed by law. | ||
A minimum price allowed by law. | ||
A maximum price consumers are willing to pay. | ||
A minimum price consumers are willing to pay. |
2 points
Question 4
In 1938, Congress set the first minimum wage at $0.25 per hour. While this was a modest price floor for the country, it was a very large increase for what US territory which was not exempt from the law?
Arizona | ||
Puerto Rico | ||
Cuba | ||
Hawaii |
2 points
Question 5
Which of the following is a possible effect of a price ceiling?
A surplus of the good. | ||
Increases in product quality. | ||
Increased gains from trade. | ||
People will waste time in lines waiting to purchase the good. |
2 points
Question 6
Which of the following is a possible effect of a price floor?
Decreases in product quality. | ||
The quantity supplied exceeds the quantity demanded. | ||
Increased gains from trade. | ||
A shortage of the good. |
2 points
Question 7
Which of the following is a possible effect of a price ceiling?
Increased gains from trade. | ||
Increases in product quality. | ||
A surplus of the good. | ||
The quantity demanded exceeds the quantity supplied. |
Question 1
During a crisis such as Hurricane Katrina, governments often make it illegal to raise the price of emergency items like flashlights and bottled water. In practice, this means that these items get sold on a first-come, first-served basis. If a person has a flashlight that she values at $5, but its price on the black market is $40, what gains from trade are lost if the government shuts down the black market?
$30 | ||
$35 | ||
$40 | ||
Indeterminant with the given information. |
2 points
Question 2
Which of the following is an example of a price floor?
A sale price with a limit on the quantity you can purchase. | ||
Rent-controlled apartments | ||
Predatory pricing designed to put a competitor out of business. | ||
The minimum wage |
2 points
Question 3
Airline regulation of the 1970s produced a similar result to which of the following government interventions?
The Affordable Care Act | ||
Minimum wage laws | ||
Rent control laws | ||
Communism |
2 points
Question 4
Which of the following is a possible effect of a price ceiling?
A surplus of the good. | ||
Increases in product quality. | ||
Increased gains from trade. | ||
People will waste time in lines waiting to purchase the good. |
2 points
Question 5
What is a price ceiling?
A minimum price consumers are willing to pay. | ||
A minimum price allowed by law. | ||
A maximum price allowed by law. | ||
A maximum price consumers are willing to pay. |
2 points
Question 6
Why are the long lines generated by a shortage worse than paying a higher price in money?
It is not better or worse. Paying in time and paying in money are essentially the same in a market economy. | ||
Paying with time reduces the value of money, and prevents valuable trades from occurring. | ||
Waiting in line is a waste of a valuable resource: time. Paying a price in money transfers the value of resources from one person to another, and maximizes the value of resources. | ||
Paying with time gives those who do not work an advantage over those who do. |
2 points
Question 7
Which of the following is a possible effect of a price floor?
The quantity supplied exceeds the quantity demanded. | ||
Increased gains from trade. | ||
Decreases in product quality. | ||
A shortage of the good. |