Practice Questions
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What is the primary effect of a price floor set above the equilibrium price in a market?
A price floor is a minimum price set by the government. Other options are incorrect because Some might think a price floor causes a shortage; It's a c...
How does the implementation of a price floor typically affect consumer surplus in a market?
A price floor sets a minimum price. Other options are incorrect because Some might think lower prices come from a price floor; It may seem that prices...
What is the primary effect of a price floor set above the equilibrium price on a market?
A price floor is a minimum price set by the government. Other options are incorrect because Some might think higher prices mean people want to buy mor...
How does the implementation of a price floor by the government typically affect producer surplus and lead to market distortion?
A price floor sets a minimum price for goods. Other options are incorrect because This answer suggests that a price floor lowers producer surplus, whi...
How do agricultural price supports interact with the elasticity of demand and contribute to market failure in the agricultural sector?
When price supports are set high, farmers produce more than people want to buy. Other options are incorrect because Some might think that price suppor...
What is the primary effect of a price floor set above the equilibrium price in a market?
A price floor is a minimum price set by the government. Other options are incorrect because Some might think a price floor causes a shortage; It's a c...
What is likely to happen in a market when a price floor is set above the market equilibrium price?
When a price floor is set above the market price, sellers want to sell more goods at the higher price. Other options are incorrect because Some might ...
What is a likely outcome of a government-imposed price floor on a product?
A price floor sets a minimum price. Other options are incorrect because Some might think a higher price means people will buy less; It's easy to think...
Price floor : Surplus :: Subsidy : ?
A subsidy helps producers by giving them extra money. Other options are incorrect because Some might think subsidies cause waste in the market; It's e...
A government imposes a price floor on milk to ensure farmers receive a fair income. After the price floor is enacted, what is the most likely effect on the milk market?
When a price floor is set, it means milk must be sold at a higher price. Other options are incorrect because Some might think that prices can drop bel...
How does a price floor typically affect the market and producer behavior?
A price floor sets a minimum price for a good. Other options are incorrect because Some might think a price floor makes producers supply more; It's a ...
When a price floor is set above the equilibrium price, it can lead to a surplus in the market because the quantity supplied exceeds the quantity ____. This can create inefficiencies in the market.
When the price is too high, people buy less. Other options are incorrect because Some might think that if more is made, there will be more sold; Inves...
If a government imposes a price floor on a product, what is the most likely immediate effect on the market for that product?
A price floor sets a minimum price that is higher than what many people want to pay. Other options are incorrect because Some might think that lower p...
Arrange the following steps that illustrate the impact of a price floor on a market experiencing externalities: A) The government sets a price floor above the equilibrium price, B) Producers respond to the price floor by increasing production, C) The quantity supplied exceeds the socially efficient quantity, D) A deadweight loss occurs due to the surplus in the market.
First, the government sets a price floor above the normal price. Other options are incorrect because This option suggests that producers act before th...
Which of the following statements accurately describe the effects of a price floor in a market? Select all that apply.
All the statements provided misunderstand how price floors work. Other options are incorrect because Some might think a higher minimum price always le...
A government decides to set a price floor for a staple food item to ensure farmers receive a fair income. Which of the following outcomes best illustrates the impact of this price floor on the market?
When a price floor is set, it means the price cannot go below a certain level. Other options are incorrect because This answer suggests nothing change...
How does a price floor typically affect the market equilibrium and producer behavior?
A price floor sets a minimum price. Other options are incorrect because Some might think a price floor lowers supply; It's a common mistake to think p...
Master Price Floors and Market Impact
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