Question : 111) In competitive markets, binding price floors and binding price : 1384179

 

111) In competitive markets, binding price floors and binding price ceilings lead to

A) a reduction in deadweight loss.

B) fairer prices for consumers and producers, and therefore are better for society as a whole.

C) an overall increase in economic surplus, and therefore to market efficiency.

D) a maximization of economic surplus.

E) an overall reduction in economic surplus, and therefore to market inefficiency.

112) Output quotas are commonly used in markets for

A) financial products.

B) exported goods.

C) imported goods.

D) agricultural products.

E) textiles.

113) Consider the Canadian market for barley.  Suppose a marketing board sets a production quota which is below the equilibrium quantity.  The quota will cause the price of barley to ________ and the total revenue earned by Canadian barley farmers to ________.

A) rise; rise if demand is inelastic

B) rise; rise if demand is elastic

C) fall; fall if demand is inelastic

D) fall; fall if demand is elastic

E) remain unchanged; remain unchanged

114) Consider Canada’s east coast lobster fishery.  Suppose the government sets a production quota which is below the equilibrium quantity.  Relative to the free-market equilibrium, we can expect the result to be

A) an increase in price and a decrease in deadweight loss.

B) a decrease in price and a decrease in deadweight loss.

C) the free-market equilibrium price and quantity because the quota is not binding.

D) an increase in price and the introduction of a deadweight loss.

E) a decreased price.

115) Suppose a binding output quota is imposed in a previously competitive market with free-market equilibrium price and quantity. The result is

A) higher price and higher quantity exchanged.

B) higher price and lower quantity exchanged.

C) lower price and lower quantity exchanged.

D) lower price and higher quantity exchanged.

E) no change in price or quantity exchanged.

116) Refer to Figure 5-8. Suppose that a binding output quota is imposed on this market at quantity Q1. The loss in economic surplus due to the quota is equal to

A) areas 5 and 6.

B) areas 5, 6 and 7.

C) areas 2 and 5.

D) area 1.

E) areas 1, 2 and 3.

117) Refer to Figure 5-8. After the imposition of a milk quota at quantity Q1, economic surplus is represented by

A) areas 1, 2 and 5.

B) areas 3 and 4.

C) areas 1, 2 and 3.

D) areas 1, 2, 3, 4, 5, 6 and 7.

E) areas 2, 3, 5 and 6.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

118) Refer to Table 5-2. Total farmers’ revenue under the free-market equilibrium is

A) $3000.

B) $15 000.

C) $35 000.

D) $63 000.

E) $75 000.

119) Refer to Table 5-2.  Consider the market-clearing equilibrium.  If the government then imposes a production quota of 500 units, the price of this commodity will ________ relative to the free-market equilibrium price.

A) remain unchanged

B) rise by $20

C) fall by $20

D) rise by $40

E) fall by $40

120) Refer to Table 5-2. Consider the market-clearing equilibrium. If the government then imposes a production quota of 500 units, the deadweight loss that is created is equal to

A) $1000.

B) $2000.

C) $3000.

D) $4000.

E) $5000.

 

 

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