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Questions and Answers
Rent-control laws dictate
Rent-control laws dictate
- only a maximum rent that landlords may charge tenants. (correct)
- the exact rent that landlords must charge tenants.
- only a minimum rent that landlords may charge tenants.
- both a minimum rent and a maximum rent that landlords may charge tenants.
Minimum-wage laws dictate
Minimum-wage laws dictate
- only a minimum wage that firms may pay workers. (correct)
- the exact wage that firms must pay workers.
- both a minimum wage and a maximum wage that firms may pay workers.
- only a maximum wage that firms may pay workers.
A price ceiling is
A price ceiling is
- imposed to make sure everyone can earn a fair wage.
- often imposed on markets in which “cutthroat competition" would prevail without a price ceiling.
- a legal maximum on the price at which a good can be sold. (correct)
- often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
If a price ceiling is binding, then
If a price ceiling is binding, then
If the government imposes a binding price ceiling on a market, then the price paid by buyers will
If the government imposes a binding price ceiling on a market, then the price paid by buyers will
To say that a price ceiling is binding is to say that the price ceiling
To say that a price ceiling is binding is to say that the price ceiling
The imposition of a binding price ceiling on a market causes
The imposition of a binding price ceiling on a market causes
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the
Refer to Figure 6-1. A binding price ceiling is shown in
Refer to Figure 6-1. A binding price ceiling is shown in
A price floor is
A price floor is
If a price floor is not binding, then
If a price floor is not binding, then
If a nonbinding price floor is imposed on a market, then the
If a nonbinding price floor is imposed on a market, then the
If a binding price floor is imposed on the pizza market, then
If a binding price floor is imposed on the pizza market, then
Refer to Figure 6-3. A government-imposed price of $6 in this market is an example of a
Refer to Figure 6-3. A government-imposed price of $6 in this market is an example of a
Refer to Figure 6-5. Which of the following statements is not correct?
Refer to Figure 6-5. Which of the following statements is not correct?
Refer to Figure 6-8. When the price ceiling is enforced in this market and the supply curve for gasoline shifts from S1 to S2,
Refer to Figure 6-8. When the price ceiling is enforced in this market and the supply curve for gasoline shifts from S1 to S2,
Refer to Figure 6-8. When the price ceiling is enforced in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is
Refer to Figure 6-8. When the price ceiling is enforced in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is
Flashcards
Price ceiling
Price ceiling
A legal maximum set on the price at which a good can be sold.
Binding price ceiling
Binding price ceiling
When a price ceiling is set below the equilibrium price, it becomes binding, influencing the market.
Non-binding price ceiling
Non-binding price ceiling
When the price ceiling doesn't affect the market because it's set above the equilibrium price.
Shortage caused by a price ceiling
Shortage caused by a price ceiling
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Price floor
Price floor
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Binding price floor
Binding price floor
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Non-binding price floor
Non-binding price floor
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Surplus caused by a price floor
Surplus caused by a price floor
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Minimum wage laws
Minimum wage laws
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Rent control laws
Rent control laws
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Binding price ceiling causes a shortage
Binding price ceiling causes a shortage
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Binding price floor causes a surplus
Binding price floor causes a surplus
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Equilibrium price
Equilibrium price
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Quantity demanded
Quantity demanded
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Quantity supplied
Quantity supplied
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Demand curve
Demand curve
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Supply curve
Supply curve
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Market equilibrium
Market equilibrium
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Equilibrium price
Equilibrium price
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Equilibrium quantity
Equilibrium quantity
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Shortage in a market
Shortage in a market
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Surplus in a market
Surplus in a market
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Price control
Price control
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Binding price ceiling
Binding price ceiling
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Binding price floor
Binding price floor
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Non-binding price ceiling
Non-binding price ceiling
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Non-binding price floor
Non-binding price floor
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Shortage
Shortage
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Surplus
Surplus
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Study Notes
Rent Control Laws
- Rent control laws regulate the maximum rent landlords can charge tenants.
- They often set a maximum rent, but not a minimum.
Minimum Wage Laws
- Minimum wage laws dictate a minimum wage firms must pay workers.
- They do not set maximum wages.
Price Ceilings
- Price ceilings set a legal maximum price for a good.
- They are often imposed when competition is cutthroat, or when sellers argue for an unfair outcome without this ceiling.
- Binding price ceilings create shortages; the quantity demanded exceeds the quantity supplied.
Price Floors
- Price floors set a legal minimum price for a good.
- Often used when buyers argue the market outcome is unfair without a price floor.
- Binding price floors create surpluses; quantity supplied exceeds the quantity demanded.
Binding Price Ceilings and Shortages
- When a price ceiling is binding, it sets a maximum price below the equilibrium price.
- This results in a shortage in the market.
Binding Price Floors and Surpluses
- A binding price floor sets a minimum price above the equilibrium price.
- This leads to a surplus in the market.
Non-Binding Price Ceilings and Floors
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Non-binding price ceilings are set above the equilibrium price and don't affect the equilibrium.
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Non-binding price floors are below the equilibrium price and don't affect the equilibrium.
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Changes in supply and demand can affect the effectiveness of price controls.
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Shifts in either supply or demand can create new market imbalances.
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