Exercise 3 – Regulated Prices – Flashcards
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A price control is:
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a legal restriction on how high or low a price in a market may go.
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A binding price ceiling is designed to:
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keep prices low.
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The government imposes a price ceiling below the equilibrium price. The price ceiling will cause:
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a shortage of the good.
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Which of the following is an example of a black market?
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A tenant in a rent-controlled apartment subletting at a higher rent.
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A maximum price set below the equilibrium price is a:
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price ceiling.
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Rent controls set a price ceiling below the equilibrium price and therefore:
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quantity demanded exceeds the quantity supplied.
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A price ceiling will have no effect if:
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it is set above the equilibrium price.
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Suppose the government sets a price floor of $2.85 per bushel on corn when the current price is $2.55. This price floor will:
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cause a surplus of corn.
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A minimum price set above the equilibrium price is a:
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price floor.
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Suppose the government sets a price floor below the current price of the good. This price floor will:
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have no effect on the price of the good.
