Download Price Controls Quiz

Butler Economics
NAME: ____________________________________
Price Controls Quiz
Part I
Look at the graph below. Assume that it depicts the supply and demand for widgets.
Price
($)
120
110
100
90
80
70
60
50
40
30
20
10
0
D
S
0
1
2
3
4
5
6
7
8
9
10
Quantity (# x 100)
Questions: Answer the questions in the spaces provided, or draw on the graph.
Given the graph above,
_________1.
What would be the equilibrium price of widgets?
_________2.
What would be the equilibrium number of widgets exchanged?
_________3.
Using a pen in a color other than black, draw a line showing a price ceiling set at $30.
[Don’t write anything in the blank at left.]
_________4.
Using the same pen, draw in dotted lines to show the quantity demanded and quantity
supplied at this price. [Don’t write anything in the blank at left.]
_________5.
What is the quantity demanded with this price ceiling at $30?
_________6.
What is the quantity supplied with this price ceiling at $30?
_________7.
Is there a surplus or a shortage with this price ceiling at $30?
_________8.
What is the (approximate) size of the surplus or shortage with this price ceiling at $30?
_________9.
If the price ceiling is removed, what will happen to the price of widgets? (rise, fall, or
constant)
_________10.
If the price ceiling is removed, what will happen to the quantity of widgets actually
exchanged in the marketplace? (rise, fall, or constant)
Part II
Look at the graph below. Assume that it depicts the supply and demand for wombles.
Price
($)
120
110
100
90
80
70
60
50
40
30
20
10
0
D
S
0
1
2
3
4
5
6
7
8
9
10
Quantity (# x 100)
Questions: Answer the questions in the spaces provided, or draw on the graph.
Given the graph above,
_________11.
What would be the equilibrium price of wombles?
_________12.
What would be the equilibrium number of wombles exchanged?
_________13.
Using a pen in a color other than black, draw a line showing a price floor set at $70.
[Don’t write anything in the blank at left.]
_________14.
Using the same pen, draw in dotted lines to show the quantity demanded and quantity
supplied at this price. [Don’t write anything in the blank at left.]
_________15.
What is the quantity demanded with this price floor at $70?
_________16.
What is the quantity supplied with this price floor at $70?
_________17.
Is there a surplus or a shortage with this price floor at $70?
_________18.
What is the (approximate) size of the surplus or shortage with this price floor at $70?
_________19.
If the price floor is removed, what will happen to the price of wombles? (rise, fall, or
constant)
_________20.
If the price floor is removed, what will happen to the quantity of wombles actually
exchanged in the marketplace? (rise, fall, or constant)
_________21.
If the government established a price support at $70, instead of a price floor at that price,
how many widgets would widget makers actually sell?
_________22.
If the government established a price support at $70, instead of a price floor at that price,
how many widgets would consumers actually buy in the marketplace?
_________23.
If the government established a price support at $70, instead of a price floor at that price,
how many widgets would the government buy?
_________24.
What would happen to the widgets the government would buy?
_________25.
What are your initials?