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Commerce and BusinessbackBusinessbackPrinciples of EconomicsbackEconomicsbackPractice Set 2495back

Price Controls And Market Efficiency

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Question 1
Free
Multiple Choice

At any disequilibrium price,whether government controlled or not,the quantity actually exchanged is determined by

Choose correct answer/s
A

the elasticity of supply.

B

the elasticity of demand.

C

government decree.

D

the lesser of quantity demanded and quantity supplied.

E

the greater of quantity demanded and quantity supplied.

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Question 2
Free
Multiple Choice

Consider a competitive labour market.The likely consequence of a binding minimum wage in this labour market is

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A

a labour shortage.

B

a lower wage for all individuals.

C

a higher wage for all individuals.

D

excess demand for workers.

E

unemployment.

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Question 3
Free
Multiple Choice

Government price controls are policies that attempt to maintain the

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A

quantity bought at less than the quantity sold.

B

quantity sold at less than the quantity bought.

C

the price at some disequilibrium value.

D

market price at equilibrium.

E

price requested by the seller.

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Question 4
Free
Multiple Choice

In a market where we observe a disequilibrium,quantity exchanged is determined

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A

by the quantity demanded.

B

by the greater of quantity demanded and quantity supplied.

C

by neither quantity demanded nor quantity supplied.

D

by the lesser of quantity demanded and quantity supplied.

E

by the quantity supplied.

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Question 5
Free
Multiple Choice

Which of the following statements about government price controls is most accurate.They

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A

act as a guideline to producers as to what is a fair price.

B

inform consumers what is the maximum price they should pay.

C

usually set upper or lower limits on prices.

D

ensure that the actual price is at its free-market equilibrium.

E

ensure that transactions take place at a fair price.

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Question 6
Multiple Choice

The price of a good or a service can be determined by free interaction of demand and supply or by a government price regulation.One important difference between these two price-determining methods is

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A
there are no shortages or surpluses at the free-market equilibrium price.
B
regulated prices are fairer since more people can then afford the goods or services.
C
that a regulated price above the equilibrium price will always result in shortages.
D
the government is in the best position to know the needs of the people.
E
one is capitalist and the other is communist.
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Question 7
Multiple Choice

Consider a market in which there is a government-set price.If there is excess demand at this price,

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A
the market is in its free-market equilibrium.
B
the market is in disequilibrium.
C
there are unsuccessful sellers.
D
the product has not reached the point of saturation.
E
none of the product will be exchanged.
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Question 8
Multiple Choice

In competitive markets,price floors and price ceilings usually lead to

Choose correct answer/s
A
shortages.
B
a reduction in quantities exchanged.
C
surpluses.
D
production control by the government.
E
more equitable distributions of commodities.
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Question 9
Multiple Choice

In free and competitive markets,shortages are eliminated by

Choose correct answer/s
A
government price controls.
B
rationing.
C
black markets.
D
price increases.
E
price decreases.
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Question 10
Multiple Choice

In free and competitive markets,surpluses are eliminated by

Choose correct answer/s
A
government price controls.
B
government purchases.
C
black markets.
D
price increases.
E
price decreases.
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Question 11
Multiple Choice

Suppose the government sets a particular price in the market for gold,which results in an excess supply.In this situation,

Choose correct answer/s
A
the market is in equilibrium.
B
the market is in disequilibrium.
C
there are unsuccessful buyers.
D
the gold market has not reached the point of saturation.
E
no gold will be exchanged.
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Question 12
Multiple Choice

A minimum permissible price established by the government is called

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A
the equilibrium price.
B
the margin price.
C
a price ceiling.
D
a price floor.
E
the fair price.
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Question 13
Multiple Choice

If the government fixes the price of good X above its free-market equilibrium level,we should expect

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A
a surplus of good X to occur.
B
a shortage of good X to occur.
C
an excess demand for good X.
D
a black market to arise for good X.
E
a new free-market equilibrium price to be established.
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Question 14
Multiple Choice

A legally imposed upper limit on a price is called

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A
a price floor.
B
a price support.
C
an excise price.
D
a price ceiling.
E
a government price.
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Question 15
Multiple Choice

A binding price floor is a

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A
minimum price,below equilibrium,below which price is not allowed to fall.
B
maximum price,above equilibrium,which price is not allowed to exceed.
C
minimum price,above equilibrium,below which price is not allowed to fall.
D
maximum price,below equilibrium,which price is not allowed to exceed.
E
any minimum price below which price is not allowed to fall.
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Question 16
Multiple Choice

A legal price floor is a

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A
price set by the government at which all goods or services must be legally sold.
B
maximum price above which sales cannot legally be made.
C
minimum price below which sales cannot legally be made.
D
price above which there would be no demand.
E
price below which there would be no supply.
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Question 17
Multiple Choice

In which type of market would a government be most likely to establish a "legal" price floor?

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A
housing market
B
labour market
C
diamond market
D
electricity market
E
natural gas market
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Question 18
Multiple Choice

For a price floor to be binding,it must be set

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A
very low.
B
at the free-market equilibrium price.
C
below the free-market equilibrium price.
D
at a level such that there exists some unsatisfied demand.
E
above the free-market equilibrium price.
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Question 19
Multiple Choice

Consider the market for pulp and paper.Suppose,in an attempt to help this industry,the government sets a price floor above the free-market equilibrium price.The result will be

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A
a continuation of the market-determined equilibrium price and quantity.
B
the quantity demanded will exceed quantity supplied and there will be a shortage in the market.
C
the quantity supplied will exceed quantity demanded and there will be a surplus in the market.
D
a new free-market equilibrium at a higher price and lower output level.
E
increased government revenue.
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Question 20
Multiple Choice

Consider the market for iron ore,an important industrial input.Suppose the government sets a price floor below the free-market equilibrium price.The result will be

Choose correct answer/s
A
a continuation of the free-market equilibrium price and quantity.
B
the quantity demanded will exceed quantity supplied and there will be a shortage in the market.
C
the quantity supplied will exceed quantity demanded and there will be a surplus in the market.
D
a new free-market equilibrium at a lower price and higher output level.
E
increased government revenue.
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