Practice Questions
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What is a price floor and its effect on a competitive market?
A price floor is a minimum price set by the government. Other options are incorrect because This option confuses price floors with price ceilings; Thi...
How does the implementation of a price floor in a competitive market affect consumer behavior?
A price floor sets a minimum price for a product. Other options are incorrect because Some might think higher prices mean more people want to buy; It'...
How do agricultural price supports, implemented as price floors, impact economic welfare in competitive markets?
Price floors set a minimum price for goods. Other options are incorrect because Some might think price floors lower prices, but they actually keep pri...
How would the implementation of a price floor in a competitive market likely affect consumer behavior towards a particular good?
A price floor sets a minimum price. Other options are incorrect because Some might think a lower price means more people will buy it; It's a common mi...
In a competitive market, how do non-binding price floors affect agricultural products with inelastic demand?
A non-binding price floor is set below the market price. Other options are incorrect because Some might think a price floor raises supply; People may ...
What is a price floor and its effect on a competitive market?
A price floor is a minimum price set by the government. Other options are incorrect because This option confuses price floors with price ceilings; Thi...
What is the likely outcome in a competitive market if 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 at the higher price. Other options are incorrect because Some might think ...
What is the effect of a price floor set above the equilibrium price in a competitive market?
When a price floor is set above the equilibrium price, it means prices can't go lower. Other options are incorrect because Some might think higher pri...
Price floors in a competitive market are to supply surplus as minimum wage laws are to what?
Minimum wage laws set a pay limit that can lead to fewer jobs. Other options are incorrect because Some might think that minimum wage helps balance th...
Arrange the following steps in the correct order to analyze the effects of a price floor on the potato market: A) Evaluate the impact on producer surplus, B) Identify the equilibrium price before the price floor, C) Observe the resulting surplus and government intervention, D) Assess changes in consumer behavior due to higher prices.
First, we need to find the equilibrium price. Other options are incorrect because This option skips evaluating the equilibrium price first; This optio...
Which of the following scenarios best exemplifies the effects of a price floor in a competitive market?
A price floor is a minimum price set by the government. Other options are incorrect because This option confuses price caps with price floors; This op...
Which of the following statements accurately describe the effects of a binding price floor in a competitive market? Select all that apply.
Other options are incorrect because Some think a price floor means more goods are available; Many believe a price floor lowers prices for consumers....
If the government sets a price floor for potatoes at $7, what is the likely outcome in the market?
When the price is set above what people want to pay, more potatoes are made, but fewer people buy them. Other options are incorrect because Some might...
In a competitive market, when the government imposes a price floor above the equilibrium price, it may lead to a surplus because the quantity supplied will exceed the quantity __________.
When the price is set too high, sellers make more goods than buyers want. Other options are incorrect because Some might think a price floor means les...
What is the likely outcome of a binding price floor set above the equilibrium price in a competitive market?
When a price floor is set above the equilibrium price, it means sellers can't sell below that price. Other options are incorrect because Some might th...
A government has implemented a price floor of $10 for rice to support local farmers. After this policy is enacted, what is the most likely outcome in the market for rice?
When the government sets a price floor, it means rice cannot be sold for less than $10. Other options are incorrect because Some might think the price...
If the government sets a price floor of $7 per sack for potatoes, leading to a surplus of potatoes in the market, what is the underlying cause of this surplus?
A price floor is a minimum price set by the government. Other options are incorrect because This option suggests the price floor is low, which would a...
Master Price Floors in Competitive Markets
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