Practice Questions
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What is a likely consequence of implementing price controls on essential goods?
When prices are set too low, people want to buy more than what is available. Other options are incorrect because Some might think that price controls ...
What is a potential unintended consequence of imposing price controls on essential goods in a market?
When prices are kept low, sellers may not want to sell as much. Other options are incorrect because Some might think price controls make the market wo...
What is the effect of a price floor on economic welfare in a market where the equilibrium price is lower than the price floor?
When a price floor is set above the market price, some buyers can't afford the higher price. Other options are incorrect because Some might think high...
What is a potential unintended consequence of government-imposed price controls in a free market?
When the government sets a price too low, sellers may not want to sell. Other options are incorrect because Some might think lower prices mean more go...
How does the implementation of price controls affect consumer surplus in a market where demand is highly elastic?
When price controls are put in place, producers may supply less. Other options are incorrect because Some might think lower prices always help consume...
What is the primary purpose of a price ceiling in a market?
A price ceiling is a limit on how high a price can go. Other options are incorrect because Some might think a price ceiling raises prices, but it actu...
What is a price floor in the context of market outcomes?
A price floor is the lowest price allowed by law. Other options are incorrect because This option confuses price floors with price ceilings; This opti...
What is likely to happen when a price ceiling is set below the market equilibrium price?
When a price ceiling is below the market equilibrium, it means prices can't go high enough. Other options are incorrect because Some might think a sur...
Price controls are to market equilibrium as a tightrope walker is to:
High winds can make it hard for a tightrope walker to stay balanced. Other options are incorrect because Balance is what the tightrope walker aims for...
How do binding price controls typically impact market efficiency?
Price controls can cause shortages or surpluses. Other options are incorrect because Some might think price controls always help everyone; It's a comm...
What is the primary cause of a surplus in a market that has implemented a binding price floor?
When a price floor is set, it means prices can't go below a certain level. Other options are incorrect because This idea suggests that lower prices ma...
Arrange the following steps in the process of how price controls affect market outcomes, starting from the imposition of a price ceiling or floor: A) Market reaches a new equilibrium, B) Producers respond to changes in price incentives, C) Shortages or surpluses emerge, D) Government imposes a price control.
First, the government sets a price control. Other options are incorrect because This option suggests the market finds a new balance before producers r...
A local government imposes a price ceiling on rental apartments to make housing more affordable. What is the most likely outcome of this price control?
When the government sets a limit on how high rents can be, it can lead to fewer apartments available. Other options are incorrect because Some might t...
A government sets a price ceiling on rental apartments in a city, resulting in many people unable to find housing. What type of market outcome does this situation exemplify?
A price ceiling makes it illegal to charge too much for rent. Other options are incorrect because A surplus happens when there are too many apartments...
Which of the following statements accurately describe the effects of binding price controls in a market? Select all that apply.
Other options are incorrect because People might think that a price ceiling helps supply more goods; Some might believe a price floor means more goods...
When a government imposes a binding price ceiling on a market, it typically leads to a situation where the quantity demanded exceeds the quantity supplied, resulting in __________.
A price ceiling makes prices lower than they should be. Other options are incorrect because Some might think a price ceiling creates extra products; E...
How do binding price controls typically affect market efficiency and producer behavior?
Price controls can create situations where there is too much or too little of a product. Other options are incorrect because Some people think price c...
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