Question 1

Which of the following is the most correct statement about the impact of rent controls?

Accepted Answer

A)   The short-run supply curve for apartments is inelastic, so rent controls create larger shortages in the short run than in the long run.
B)   The short-run supply curve for apartments is inelastic, so rent controls create smaller shortages in the short run than in the long run.
C)   The long-run supply curve for apartments is inelastic, so rent controls create larger shortages in the long run than in the short run.
D)   The long-run supply curve for apartments is inelastic, so rent controls create smaller shortages in the long run than in the short run.

Question 2

Reference: Ref 8-3 (Figure: Government Price Controls)  Refer to the figure. If the government sets the price ceiling at $31, there will be:

Accepted Answer

A)   a shortage of 15 units.
B)   a surplus of 15 units.
C)   a supply of 20 units.
D)   no effect on the market.

Question 3

(Table: Gasoline Market)  Use the table. The total cost of purchasing 20 gallons of gas at the free market price and the price ceiling are ________ and ________, respectively.

Accepted Answer

A)   $100; $80
B)   $80; $90
C)   $60; $75
D)   $40; $60

Question 4

Reference: Ref 8-4 (Figure: Effects of Price Ceilings)  Refer to the figure. At a price ceiling of $2:

Accepted Answer

A)   bribes of $1 per unit may be common.
B)   seller discounts of $1 may be common.
C)   bribes of $3 per unit may be common.
D)   seller discounts of $3 per unit may be common.

Question 5

Reference: Ref 8-11 (Figure: Price Ceilings and Consumer Valuation)  Refer to the figure. Suppose a price ceiling of $3 goes into effect. If the goods sold are allocated to buyers randomly, what is the total consumer surplus in this market?

Accepted Answer

A)   $90
B)   $120
C)   $30
D)   $150

Question 6

Which of the following is NOT a result of rent control?

Accepted Answer

A)   higher quality housing
B)   bribery
C)   fewer new apartments offered for rent
D)   less maintenance provided by landlords

Question 7

The long-run supply curve for rent-controlled apartments is generally more inelastic than the short-run supply curve.

Accepted Answer

A) True 
 B)False

Question 8

Briefly discuss the U.S. experience with price ceilings during the early 1970s. What effects of the price ceilings became apparent during this period, and how did the period of price ceilings eventually end?

Accepted Answer

In August 1971, President Nixon froze al...

Question 9

The presence of price floors in a market usually is an indication that:

Accepted Answer

A)   there is an insufficient quantity of a good or service being produced.
B)   the forces of supply and demand are unable to establish an equilibrium price.
C)   sellers of the good or service outnumber the buyers.
D)   policy makers believe the price floor does not involve inequities.

Question 10

Which of the following events occurred during the 1973-1974 oil crisis in the United States? I. Gas stations were ordered to be closed between 9 PM on Saturday and 12:01 AM on Monday. II. The government decided to allocate oil by command. III. The 55 mph speed limit was repealed. IV. Daylight savings time was implemented.

Accepted Answer

A)   I and IV only
B)   I, II, and III only
C)   I, II, and IV only
D)   I, III, and IV only

Question 11

Reference: Ref 8-11 (Figure: Price Ceilings and Consumer Valuation)  Refer to the figure. Suppose a price ceiling of $3 goes into effect. What is the loss of consumer surplus due to the random allocation of price controlled goods compared to the allocation only to the highest value users?

Accepted Answer

A)   $90
B)   $60
C)   $150
D)   $30

Question 12

Ultimately repealing the price controls on gasoline and oil:

Accepted Answer

A)   led to permanently higher gasoline prices.
B)   led to a higher supply of gasoline and lower prices.
C)   was disastrous as the market collapsed due to a lack of government regulation.
D)   was not able to eliminate the shortages of gasoline in the United States.

Question 13

Figure: Price Ceiling  Reference: Ref 8-1 (Figure: Price Ceiling)  Refer to the figure. If a price ceiling were set at $12, there would be a:

Accepted Answer

A)   shortage of 50 units.
B)   surplus of 40 units.
C)   shortage of 0 units.
D)   surplus of 20 units.

Question 14

What is blat?

Accepted Answer

A)   a long line
B)   the time costs associated with buying price controlled goods
C)   the use of political connections to get favors
D)   a dilapidated rent-controlled apartment.

Question 15

Which of the following statements is correct regarding the restrictions on entry into the airline industry?

Accepted Answer

A)   Resources were equally allocated because new airlines were kept out of the industry.
B)   Resources were misallocated because low-cost airlines were kept out of the industry.
C)   Resources were efficiently allocated because high-cost airlines were kept out of the industry.
D)   Resources were reallocated because only low-cost airlines were allowed to enter the industry.

Question 16

Reference: Ref 8-9 (Figure: Price Ceilings and Consumer Surplus)  Refer to the figure. There is a price ceiling of $20. What is the value of consumer surplus if all units of the good are allocated to the highest valued uses?

Accepted Answer

A)   $40
B)   $120
C)   $200
D)   $210

Question 17

Reference: Ref 8-8 (Figure: Costs of Price Ceilings)  Refer to the figure. What is the dollar amount of the deadweight loss after the price ceiling of $4 has been implemented?

Accepted Answer

A)   $160
B)   $180
C)   $20
D)   $10

Question 18

Price ceilings cause the quantity demanded to be less than the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 19

Reference: Ref 8-10 (Figure: Price Ceilings and Valuation of Uses)  Refer to the figure. The single highest value user is willing to pay how many dollars for the product?

Accepted Answer

A)   $15
B)   $25
C)   $45
D)   $35

Question 20

The lower the price ceiling is relative to the market equilibrium price, the:

Accepted Answer

A)   larger the surplus.
B)   smaller the surplus.
C)   smaller the shortage.
D)   larger the shortage.

Exam 8: Price Ceilings and Floors

Figure: Price Ceiling Reference: Ref 8-1 (Figure: Price Ceiling) Refer to the figure. If a price ceiling were set at $12, there would be a:

Correct Answer
verified

Briefly discuss the U.S. experience with price ceilings during the early 1970s. What effects of the price ceilings became apparent during this period, and how did the period of price ceilings eventually end?

Correct Answer
verified
In August 1971, President Nixon froze al...
View Answer

Reference: Ref 8-8 (Figure: Costs of Price Ceilings) Refer to the figure. What is the dollar amount of the deadweight loss after the price ceiling of $4 has been implemented?

Correct Answer
verified

Reference: Ref 8-4 (Figure: Effects of Price Ceilings) Refer to the figure. At a price ceiling of $2:

Correct Answer
verified

Correct Answer
verified

The lower the price ceiling is relative to the market equilibrium price, the:

Correct Answer
verified

Price ceilings cause the quantity demanded to be less than the quantity supplied.

Correct Answer
verified

The long-run supply curve for rent-controlled apartments is generally more inelastic than the short-run supply curve.

Correct Answer
verified

Which of the following is NOT a result of rent control?

Correct Answer
verified

Ultimately repealing the price controls on gasoline and oil:

Correct Answer
verified

Reference: Ref 8-9 (Figure: Price Ceilings and Consumer Surplus) Refer to the figure. There is a price ceiling of $20. What is the value of consumer surplus if all units of the good are allocated to the highest valued uses?

Correct Answer
verified

Reference: Ref 8-11 (Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. What is the loss of consumer surplus due to the random allocation of price controlled goods compared to the allocation only to the highest value users?

Correct Answer
verified

Which of the following is the most correct statement about the impact of rent controls?

Correct Answer
verified

(Table: Gasoline Market) Use the table. The total cost of purchasing 20 gallons of gas at the free market price and the price ceiling are and , respectively.

Correct Answer
verified

Reference: Ref 8-11 (Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. If the goods sold are allocated to buyers randomly, what is the total consumer surplus in this market?

Correct Answer
verified

The presence of price floors in a market usually is an indication that:

Correct Answer
verified

Reference: Ref 8-3 (Figure: Government Price Controls) Refer to the figure. If the government sets the price ceiling at $31, there will be:

Correct Answer
verified

What is blat?

Correct Answer
verified

Which of the following statements is correct regarding the restrictions on entry into the airline industry?

Correct Answer
verified

Reference: Ref 8-10 (Figure: Price Ceilings and Valuation of Uses) Refer to the figure. The single highest value user is willing to pay how many dollars for the product?

Correct Answer
verified

Exam 8: Price Ceilings and Floors

Figure: Price Ceiling Reference: Ref 8-1 (Figure: Price Ceiling) Refer to the figure. If a price ceiling were set at $12, there would be a:

Correct AnswerverifiedShow Answer

Briefly discuss the U.S. experience with price ceilings during the early 1970s. What effects of the price ceilings became apparent during this period, and how did the period of price ceilings eventually end?

Correct AnswerverifiedIn August 1971, President Nixon froze al...View AnswerShow Answer

Reference: Ref 8-8 (Figure: Costs of Price Ceilings) Refer to the figure. What is the dollar amount of the deadweight loss after the price ceiling of $4 has been implemented?

Correct AnswerverifiedShow Answer

Reference: Ref 8-4 (Figure: Effects of Price Ceilings) Refer to the figure. At a price ceiling of $2:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The lower the price ceiling is relative to the market equilibrium price, the:

Correct AnswerverifiedShow Answer

Price ceilings cause the quantity demanded to be less than the quantity supplied.

Correct AnswerverifiedShow Answer

The long-run supply curve for rent-controlled apartments is generally more inelastic than the short-run supply curve.

Correct AnswerverifiedShow Answer

Which of the following is NOT a result of rent control?

Correct AnswerverifiedShow Answer

Ultimately repealing the price controls on gasoline and oil:

Correct AnswerverifiedShow Answer

Reference: Ref 8-9 (Figure: Price Ceilings and Consumer Surplus) Refer to the figure. There is a price ceiling of $20. What is the value of consumer surplus if all units of the good are allocated to the highest valued uses?

Correct AnswerverifiedShow Answer

Reference: Ref 8-11 (Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. What is the loss of consumer surplus due to the random allocation of price controlled goods compared to the allocation only to the highest value users?

Correct AnswerverifiedShow Answer

Which of the following is the most correct statement about the impact of rent controls?

Correct AnswerverifiedShow Answer

(Table: Gasoline Market) Use the table. The total cost of purchasing 20 gallons of gas at the free market price and the price ceiling are ________ and ________, respectively.

Correct AnswerverifiedShow Answer

Reference: Ref 8-11 (Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. If the goods sold are allocated to buyers randomly, what is the total consumer surplus in this market?

Correct AnswerverifiedShow Answer

The presence of price floors in a market usually is an indication that:

Correct AnswerverifiedShow Answer

Reference: Ref 8-3 (Figure: Government Price Controls) Refer to the figure. If the government sets the price ceiling at $31, there will be:

Correct AnswerverifiedShow Answer

What is blat?

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding the restrictions on entry into the airline industry?

Correct AnswerverifiedShow Answer

Reference: Ref 8-10 (Figure: Price Ceilings and Valuation of Uses) Refer to the figure. The single highest value user is willing to pay how many dollars for the product?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
In August 1971, President Nixon froze al...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

(Table: Gasoline Market) Use the table. The total cost of purchasing 20 gallons of gas at the free market price and the price ceiling are and , respectively.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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