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Chapter 4
Chapter 4
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Price control questions
Flashcards
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Questions
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Answers
1
The effect of ceiling prices
makes producers happy
increases the efficiency of markets
reduces the amount demanded
reduces the amount supplied
2
A ceiling price is the
intended to protect producers
best way to protect consumers
lowest price permitted
highest price permitted by law
3
The effect of floor prices
makes producers worse off
makes consumers happy
increases consumer surplus
makes producers happy
4
In economics, a "free" market is where
open to everyone
Government is not involved
all stakeholders benefit
goods are given away free
5
Shortage
Qs<Qd
(Qe,Pe)
P >Pe
Qs>Qd
6
A subsidy
provides finances to consumers
provides finances to producers
helps all citizens
is paid by producers to government
7
Surplus
supply<demand
Qs<Qd
Qs>Qd
demand>supply
8
A controlled price
is used only during war
helps producers
is set by a legal authority
helps consumers
9
The forces of supply and demand are equal
when there is a surplus
when no shortages exist
at equilibrium
when there is a small surplus
10
A price ceiling is always
above the equilibrium price
below the equilibrium price
when there is a surplus
at the equilibrium price
