Chapter 5 Flashcards
A binding price ceiling leads to excess demand. Which of the following is a potential method of allocating the available supply?
A. Sellers’ preferences.
B. First-come, first-served .
C. Random lottery.
D. Government-issued ration coupons.
E. All of the above are possible methods.
E. All of the above are possible methods.
A government might choose to implement a price ceiling to
A. free-up resources for other purposes.
B. satisfy notions of equity.
C. restrict production of certain goods.
D. keep specific prices down.
E. All of the above are possible motives.
E. All of the above are possible motives.
A binding price floor leads to excess supply. Which of the following is a method by which government might deal with this excess supply?
A. The government buys the unsold output and stores it.
B. The government pays firms to not produce beyond the quantity demanded.
C. The government buys the unsold output and distributes it to low-income persons.
D. All of the above have been employed by governments from time to time.
D. All of the above have been employed by governments from time to time.
A government might choose to implement a price floor to
A. keep specific prices up.
B. give into powerful political groups.
C. satisfy notions of equity.
D. All of the above have served as motivations.
D. All of the above have served as motivations.
In cities experiencing rapid growth, like Calgary and Saskatoon, it is often claimed that the “overheated” real estate market puts housing out of reach of ordinary Canadians. Not surprisingly, governments often debate how best to deal with this issue. Who bears the heaviest cost when rents are kept artificially low by:
a. legislated rent controls.
A. Nobody suffers in case of legislated rent controls.
B. Landlords that lose part of their income and potential future tenants who cannot get accommodation.
C. Government because government spendings should be increased to compensate additional costs to landlords.
D. Only new landlords because they do not get the rate of return they expected on their investments.
B. Landlords that lose part of their income and potential future tenants who cannot get accommodation.
Who bears the heaviest cost when rents are kept artificially low by:
a subsidy to tenants equal to some fraction of their rent.
A. Landlords that lose part of their income and potential future tenants who cannot get accommodation.
B. Only new landlords because rentals of private dwellings are held down.
C. Both taxpayers and landlords because rentals of private dwellings are held down.
D. Taxpayers who do not receive the subsidy.
D. Taxpayers who do not receive the subsidy.
Who bears the heaviest cost when rents are kept artificially low by:
the provision of public housing which is made available at below-market rents.
A. Taxpayers and landlords because rentals of private dwellings are held down.
B. Current landlords as a lot of new private accommodations will be built.
C. Existing tenants, because they have to pay “key money” to landlords.
D. Nobody suffers in case the public housing is provided at any level of rent.
A. Taxpayers and landlords because rentals of private dwellings are held down.
If the price mechanism is allowed to work freely, excess supply is eliminated by:
A. black markets.
B. government purchases.
C. Price increases
D. price controls
E. price decreases
E. Price decreases
If the equilibrium price for some product is $1000, a price ceiling of $1200 will result in:
A. the same general effects as an administered price of $1200.
B. no effects because the price ceiling is not binding at that price
C. surpluses of the good.
D.he same general effects as a price ceiling of $800.
E. the same general effects as a price floor of $1200.
B. no effects because the price ceiling is not binding at that price
Rent controls are a form of price:
ceiling
The market inefficiency of any binding price control is reflected by the size of the:
dead weight loss
Economic surplus is, for a given quantity of a product:
A. the difference between the value to consumers and the additional costs to firms.
B. borne entirely by producers
C. the difference between what consumers are willing to pay and a controlled price
D. a result from over production from prices above the equilibrium level.
E. gained by consumers only
A. the difference between the value to consumers and the additional costs to firms.
if a quota reduces the amount of a good produced and consumed then we will see:
A. excess supply in the market
B. that economic surplus is maximized
C. a deadweight loss
D. lower prices in the market
E. that the competitive market equilibrium is achieved.
C. a deadweight loss
