modul 5

Question 1

The model of demand and supply is used to ______ what happens when the government imposes price floors or price ceilings.

Answer 1

explain

Question 2

What is the purpose of rent control?

Answer 2

To stabilize rental prices

Question 3

How did the government modify its involvement in agricultural markets after 1973?

Answer 3

The government stopped buying surpluses and instead guaranteed farmers a target price, paying the difference if the market price fell below the target price.

Question 4

The Depression affected the entire economy, but it hit ______ particularly hard.

Answer 4

farmers

Question 5

What is the effect of technological improvements in farming on the supply curve?

Answer 5

The supply curve shifts to the right, reducing the price of food

Question 6

What is the effect of price floors on market prices?

Answer 6

Create surpluses

Question 7

Why did farmers lobby for government programs to keep their prices from falling?

Answer 7

To prevent the supply curve from shifting

Question 8

What is the purpose of government programs that guarantee a minimum price for agricultural products?

Answer 8

To ensure fair prices for farmers

Question 9

What are some ways the government can use surplus agricultural products?

Answer 9

Surpluses can be stored, shipped to developing countries as grants-in-aid, or distributed to local school lunch programs.

Question 10

What is the purpose of setting a price floor in agricultural markets?

Answer 10

To assist farmers

Question 11

What is the effect of a price ceiling on apartment rents?

Answer 11

It creates a shortage of apartments

Question 12

What was the federal government’s response to the Depression’s impact on farmers?

Answer 12

Implement price floors

Question 13

What is the effect of a price ceiling set below the equilibrium price?

Answer 13

It creates a shortage of apartments

Question 14

What are the effects of farm support programs?

Answer 14

Boost and stabilize farm incomes
Consumers pay more for food
Government spends heavily to finance the programs

Question 15

What happens when the government imposes a price floor?

Answer 15

The quantity supplied decreases

Question 16

What restrictions did farmers have to comply with in order to receive government payments?

Answer 16

Farmers had to remove acres from production and comply with certain conservation provisions.

Question 17

Rent control is an example of a __.

Answer 17

price ceiling

Question 18

Rent controls and other price ceilings often lead to various ‘backdoor’ payments to apartment owners, such as large security deposits, payments for things renters may not want, so-called ‘key’ payments, or ______.

Answer 18

bribes

Question 19

A price floor that is set ______ the equilibrium price creates a surplus.

Answer 19

above

Question 20

What is the effect of a price floor set above the equilibrium price in the market for wheat?

Answer 20

A surplus of wheat

Question 21

What is a price floor?

Answer 21

A price floor is a minimum allowable price set above the equilibrium price.

Question 22

What are the consequences of rent control?

Answer 22

Reduced tenant mobility

Question 23

What is an example of a price ceiling?

Answer 23

Rent controls

Question 24

What happens to equilibrium quantity and price in agricultural markets when there are shifts in supply and demand?

Answer 24

They change depending on the direction and magnitude of the shifts.