Chapter 3: Markets in Action

Question 0

When market equilibrium price all unacceptable,

Answer 0

Price controls are used

Question 1

When there is surplus and shortage, what brings it back to equilibrium

Answer 1

Price mechanism

Question 2

When prices are too high,

Answer 2

Price ceiling used

Question 3

What is a price ceiling

Answer 3

A legal max price on a product

Question 4

What is the result of a price ceiling

Answer 4

Shortage

Question 5

What are the consequences of shortage in a price ceiling?

Answer 5

Ration limited supply 
Give subsidies to companies 
Import more
Find alternatives
Emergence of black markets

Question 6

What are black markets

Answer 6

People willing to buy more
For higher prices

Ration helps to curb

Question 7

When is price ceiling used?

Answer 7

Housing
Basic necessities (affordable)

Question 8

When is price floor used

Answer 8

Price is too low

Question 9

A price floor is

Answer 9

Legal minimum price

Question 10

On what goods are price floors used

Answer 10

Minimum wage

Question 11

What are the effects of a price floor?

Answer 11

Surplus
Government buy surplus add to stockpile
Increase the demand through advertising or finding alternative
Artificially lower supply by reducing produces