Question : 21) A legal price floor a A) price set by the : 1384170

21) A legal price floor is a

A) price set by the government at which all goods or services must be legally sold.

B) maximum price above which sales cannot legally be made.

C) minimum price below which sales cannot legally be made.

D) price above which there would be no demand.

E) price below which there would be no supply.

22) In which type of market would a government be most likely to establish a “legal” price floor?

A) housing market

B) labour market

C) diamond market

D) electricity market

E) natural gas market

23) For a price floor to be binding, it must be set

A) very low.

B) at the free-market equilibrium price.

C) below the free-market equilibrium price.

D) at a level such that there exists some unsatisfied demand.

E) above the free-market equilibrium price.

24) Consider the market for pulp and paper. Suppose, in an attempt to help this industry, the government sets a price floor above the free-market equilibrium price. The result will be

A) a continuation of the market-determined equilibrium price and quantity.

B) the quantity demanded will exceed quantity supplied and there will be a shortage in the market.

C) the quantity supplied will exceed quantity demanded and there will be a surplus in the market.

D) a new free-market equilibrium at a higher price and lower output level.

E) increased government revenue.

25) Consider the market for iron ore, an important industrial input. Suppose the government sets a price floor below the free-market equilibrium price. The result will be

A) a continuation of the free-market equilibrium price and quantity.

B) the quantity demanded will exceed quantity supplied and there will be a shortage in the market.

C) the quantity supplied will exceed quantity demanded and there will be a surplus in the market.

D) a new free-market equilibrium at a lower price and higher output level.

E) increased government revenue.

26) An excess supply of some product is the same thing as

A) a surplus.

B) an excess demand.

C) a shortage.

D) scarcity.

E) price floor.

27) An excess demand for some product is the same thing as

A) a surplus.

B) an excess supply.

C) a shortage.

D) black market.

E) price ceiling.

28) Suppose the government establishes a binding price floor for some product. At the price floor,

A) although sellers are selling all of the product that they desire, consumers are not able to buy all that they desire.

B) a new free-market equilibrium price and quantity will be established.

C) both sellers and buyers are satisfied with the quantity that is being exchanged.

D) both sellers and buyers are exchanging the free-market equilibrium quantity.

E) although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire.

29) Suppose the government decides to eliminate a binding price floor that it had previously imposed on a particular good. It can be expected that

A) the price would increase, the quantity demanded would decrease and the quantity supplied would increase.

B) the price would increase, the quantity demanded would increase and the quantity supplied would decrease.

C) the price would decrease, the quantity demanded would decrease and the quantity supplied would increase.

D) the price would decrease, the quantity demanded would increase and the quantity supplied would decrease.

E) no changes would take place.

30) A binding minimum wage established by the government

A) is essentially a price ceiling that creates a shortage of workers.

B) will be effective only if the minimum wage is set below the free-market equilibrium wage.

C) will have no effect on the quantity of labour employed.

D) will affect adversely only those workers whose value of productivity is greater than this minimum wage.

E) is a price floor that will create a surplus of workers if the labour market is competitive.