Question : 7.1   Price Ceilings 1) A price ceiling A) an illegal price. B) the : 1239122

7.1   Price Ceilings

1) A price ceiling

A) is an illegal price.

B) is the price that exists in a black market.

C) is the maximum price that can legally be charged.

D) Both answers A and B are correct.

E) Both answers B and C are correct.

2) A price ceiling is

A) a maximum legal price.

B) a minimum legal price.

C) an equilibrium price.

D) a market-determined price.

E) the highest price at which the quantity demanded equals the quantity supplied.

3) If a price ceiling is set above the equilibrium price, then

A) there will be a surplus of the good.

B) there will be a shortage of the good.

C) there will be neither a shortage nor a surplus of the good.

D) the price ceiling will generate revenue for the government.

E) the price ceiling affects suppliers but not demanders.

4) A price ceiling in the market for gasoline that is below the equilibrium price will lead to

A) the quantity demanded of gasoline exceeding the quantity supplied.

B) an increase in the demand for gasoline.

C) a decrease in the supply of gasoline.

D) the quantity supplied of gasoline exceeding the quantity demanded.

E) no change in the market since the price ceiling is below the equilibrium price.

5) When a price ceiling below the equilibrium price is imposed on a good, production of the good

A) increases.

B) decreases.

C) does not change.

D) is frozen at the pre-ceiling level.

E) either increases or decreases depending on whether the supply of the good increases or decreases when the price ceiling is imposed.

6) A price ceiling in the market for fuel oil that is below the equilibrium price will

A) lead to the quantity supplied of fuel oil exceeding the quantity demanded.

B) lead to the quantity demanded of fuel oil exceeding the quantity supplied.

C) decrease the demand for fuel oil.

D) increase the supply of fuel oil.

E) have no effect in the market for fuel oil.

7) The demand and supply schedules for pizza are in the table above. A price ceiling of $2 per slice results in

A) a surplus of 20 slices of pizza.

B) a shortage of 20 slices of pizza.

C) a shortage of 40 slices of pizza.

D) a shortage of 60 slices of pizza.

E) neither a shortage nor a surplus.

8) The demand and supply schedules for pizza are in the table above. A price ceiling of $4 per slice results in

A) a surplus of 20 slices of pizza.

B) a shortage of 20 slices of pizza.

C) a shortage of 40 slices of pizza.

D) a shortage of 60 slices of pizza.

E) neither a shortage nor a surplus.

9) The demand and supply schedules for pizza are in the table above. If the government sets a maximum legal price of $2 per slice of pizza, then

A) there is a shortage of 20 slices of pizza.

B) this maximum price is an example of a price floor.

C) this maximum price is an example of a price ceiling.

D) Both answers A and C are correct.

E) Both answers B and C are correct.

10) The figure above illustrates the bagel market. Which of the following statements is correct?

A) With a price ceiling of $1.00 per bagel, the quantity demanded is equal to the quantity supplied.

B) With a price ceiling of $3.00 per bagel, the quantity demanded is greater than the quantity supplied.

C) With a price ceiling of $1.00 per bagel, there is a shortage of bagels.

D) Answers A and B are correct.

E) Answers B and C are correct.