economics chapter 6 test (multiple choice) – Flashcards
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"when policy makers believe that the market price of a good or service is unfair".
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Price controls are usually enacted because or why?
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true
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Price controls can cause inequities of there own: True or False
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price celling
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A legal maximum price at which a good can be sold is a price what?
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price floor
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A legal minimum price at which a good can be sold is a what?
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if it is set below equal librium price
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A price ceiling will be binding only if it is set where?
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it will have no effect
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A price ceiling that is not binding will have what type of effect?
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when a binding price celling price celling is put in place
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A shortage results when what happens?
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if it leads to a surplus
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A price floor is binding if it is what?
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the minimum wage
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An example of a price floor is what?
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a surplus to happen
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A binding price floor causes what?
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B. the number of firms selling televisions decreases
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Suppose the government has imposed a price ceiling on televisions. Which of the following events could transform the price ceiling from one that is not binding into one that is binding? A. Firms take advantage of an advance in technology that reduces the amount of labor necessary to produce televisions. B. The number of firms selling televisions decreases. C. Consumers' income decreases, and televisions are a normal good. D. All of the above are correct.
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"they are obscuring the signals that normaly guide all allocation of societies resources".
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When policymakers set prices by legal decree, they
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undersirable rationing mechanisms
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An outcome that can result from either a price ceiling or a price floor is
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inefficiencies because it wastes buyers time
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Rationing by long lines is an example of what?
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the US govt maintained a price ceiling on gas
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In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that what happened?
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it caused the supply of gasoline to decrese
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When OPEC raised the price of crude oil in the 1970s, it caused the what?
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-quantity supply to rise - quantity demanded to fall
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In the housing market, rent control causes what to happen?
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C. Price
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Which of the following is not a rationing mechanism used by landlords in cities with rent control? A) waiting lists B) race C) price D) bribes
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he fears that rent control will eliminate the incentive to maintain buildings leading to a deterioration of the city
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One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?
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A. workers determine the supply of labor, and firms determine the demand for labor.
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Which of the following is a correct statement about the labor market? A. Workers determine the supply of labor, and firms determine the demand for labor. B. Workers determine the demand for labor, and firms determine the supply of labor. C. Workers determine the supply of labor, and government determines the demand for labor. D. The forces of supply and demand, while present in the labor market, have nothing to balance in that market.
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excess supply of labor (unemployment)
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A minimum wage that is set above a market's equilibrium wage will result in what?
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they emphasize the low annual incomes for those who work for minimum wage
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Advocates of the minimum wage argue what?
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a wage subsidy
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The Earned Income Tax Credit is an example of what?
