Question :
31) Which of the following not a result of government : 1267056
31) Which of the following is not a result of government price controls?
A) Some people win and some people lose.
B) Price controls benefit poor consumers but harm producers and wealthy consumers.
C) Price controls decrease economic efficiency.
D) A deadweight loss will occur.
32) Economists are reluctant to state that price controls are desirable or undesirable because
A) it is impossible to evaluate the impact on quantity demanded and quantity supplied as a result of price controls.
B) whether the gains from the winners exceed the losses from the losers is not strictly an economic question.
C) sometimes price controls result in increases in economic efficiency and sometimes they result in decreases in economic efficiency.
D) economists are reluctant to conduct positive analysis of price controls.
33) The minimum wage is an example of a price ceiling.
34) Shortage means the same thing as scarcity.
35) Rent control is an example of a price ceiling.
36) What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price, where must price ceilings and price floors be set to have an effect on the market.
Figure 4-7
37) Refer to Figure 4-7 which shows the market for vitamins. Suppose the government imposes a price ceiling of Pv. How will the price ceiling affect the quantity supplied, quantity demanded and quantity exchanged?
Table 4-4
Price per Bushel
(dollars)
Quantity Demanded (bushels)
Quantity Supplied (bushels)
$2
40,000
0
4
34,000
4,000
6
28,000
8,000
8
24,000
16,000
10
20,000
20,000
12
18,000
28,000
14
12,000
36,000
16
6,000
40,000
Table 4-4 above contains information about the corn market. Answer the following questions based on this table.
38) Refer to Table 4-4. An agricultural price floor is a price that the government guarantees farmers will receive for a particular crop. Suppose the federal government sets a price floor for corn at $12 per bushel.
a.What is the amount of shortage or surplus in the corn market as result of the price floor?
b.If the government agrees to purchase any surplus output at $12, how much will it cost the government?
c.If the government buys all of the farmers’ output at the floor price, how many bushels of corn will it have to purchase and how much will it cost the government?
d.Suppose the government buys up all of the farmers’ output at the floor price and then sells the output to consumers at whatever price it can get. Under this scheme, what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government’s sale?
e.In this problem we have considered two government schemes: (1) a price floor is established and the government purchases any excess output and (2) the government buys all the farmers’ output at the floor price and resells at whatever price it can get. Which scheme will taxpayers prefer?
f.Consider again the two schemes. Which scheme will the farmers prefer?
g.Consider again the two schemes. Which scheme will corn buyers prefer?
39) The cities of Francistown and Nalady are five miles apart. Francistown enacts a rent control
law that puts a ceiling on rents well below their equilibrium market value. Predict the impact of this law on the competitive equilibrium rent in Nalady, which does not have a rent control law.
a.Illustrate your answer with one demand and supply graph for the apartment market in Francistown and another demand and supply graph for the apartment marketing Nalady.
b.Make sure that your graphs clearly show (1) the initial equilibrium before the rent control in both markets and (2) what happens after the imposition of rent control.
c.Clearly show any shifts in the demand or supply curves, and the movement along the curves for each market.
d.Label your graphs fully and provide written explanation for your graphs.
