Question : 6) A regulation that sets the lowest price at which : 1241596

 

6) A regulation that sets the lowest price at which it is legal to trade a good is a

A) search ceiling.

B) price floor.

C) production ceiling.

D) price ceiling.

E) subsidy.

 

7) If the government imposes an effective ________, output decreases and ________ increases.

A) price support; consumer surplus

B) price floor; consumer surplus

C) price support; total revenue

D) price floor; marginal benefit to consumers

E) price ceiling; efficiency

8) If the government imposes an effective ________, a deadweight loss ________.

A) price floor; does not occur

B) price ceiling; does not occur

C) price ceiling; occurs

D) price support; does not occur

E) Both answers C and D are correct.

 

9) Producers favor a ________ because ________.

A) price ceiling; the equilibrium price increases

B) price support; the deadweight loss is minimized

C) price ceiling; total revenue increases

D) price support; total revenue increases

E) price ceiling; consumer surplus increases

 

10) In order to have an impact, a ________ must be set below the equilibrium price, and when this occurs, ________.

A) price ceiling; consumer surplus increases

B) price floor; consumer surplus decreases

C) price ceiling; producer surplus decreases

D) price support; total revenue increases

E) price support; consumer surplus increases

11) Which of the following describes a difference between a price support and a price ceiling?

A) A price support creates a deadweight loss while a price ceiling does not.

B) A price ceiling is a regulated price while a price support is a regulated quantity.

C) A price support decreases the quantity while a price ceiling does not.

D) A price ceiling increases the price above the equilibrium price while a price support does not.

E) A price support attempts to raise the price above the equilibrium price while a price ceiling does not.

 

12) Both price supports and a price floor can

A) create a deadweight loss.

B) decrease output below the equilibrium quantity.

C) decrease the price below the equilibrium price.

D) increase consumer surplus.

E) have no effect on producer surplus.

 

13) Which of the following is true?

i.A price ceiling set above the equilibrium price has no effects.

ii.A price ceiling set below the equilibrium price creates a surplus.

iii.A price floor set above the equilibrium price has no effects.

A) only i

B) only ii

C) only iii

D) i and ii

E) ii and iii

14) Assume a market is producing efficiently. Which type of government intervention in this market might create a deadweight loss?

i.a price ceiling

ii.a price floor

iii.a price support

A) i only

B) i and ii

C) iii only

D) ii and iii

E) i, ii, and iii

 

15) Which of the following is true?

i.A price ceiling is inefficient but fair.

ii.A price floor is inefficient and unfair.

iii.A price support increases the quantity produced.

A) only i

B) only ii

C) only iii

D) i and ii

E) ii and iii