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Questions and Answers
In the context of government policies altering private market outcomes, what is the purpose of a price ceiling?
In the context of government policies altering private market outcomes, what is the purpose of a price ceiling?
- To eliminate prices entirely
- To set a legal minimum on the price of a good or service
- To increase taxes on buyers and sellers
- To set a legal maximum on the price of a good or service (correct)
Why do shortages lead to sellers rationing goods among buyers?
Why do shortages lead to sellers rationing goods among buyers?
- To ensure fairness in distributing goods
- To make more profits
- To allow buyers to set their own prices
- To bypass market signals (correct)
How do price controls affect the allocation of society's resources according to the Ten Principles from Chapter 1?
How do price controls affect the allocation of society's resources according to the Ten Principles from Chapter 1?
- Price controls always lead to fair distribution
- Price controls have no impact on resource allocation
- Price controls alter the allocation of society's resources (correct)
- Price controls lead to efficient resource allocation
What is one of the common rationing mechanisms used by sellers during shortages?
What is one of the common rationing mechanisms used by sellers during shortages?
How does an efficient rationing mechanism differ from an inefficient one during shortages?
How does an efficient rationing mechanism differ from an inefficient one during shortages?
What is the purpose of a price floor in government policies altering private market outcomes?
What is the purpose of a price floor in government policies altering private market outcomes?
What is the primary purpose of the government levying taxes on goods and services?
What is the primary purpose of the government levying taxes on goods and services?
In the context of price controls, what happens if a price ceiling is set below the equilibrium price?
In the context of price controls, what happens if a price ceiling is set below the equilibrium price?
How does a tax on a good impact the equilibrium quantity in the market?
How does a tax on a good impact the equilibrium quantity in the market?
What does the term 'incidence of a tax' refer to in economics?
What does the term 'incidence of a tax' refer to in economics?
Why is it important for policymakers to apply government policies very carefully?
Why is it important for policymakers to apply government policies very carefully?
Which economic concept determines the division of the burden of a tax between buyers and sellers?
Which economic concept determines the division of the burden of a tax between buyers and sellers?
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