Download Price Controls Practice Exam

Price Controls Practice Quiz
1. A rent ceiling set above the equilibrium price
A) restricts both the quantity demanded and the quantity supplied
B) restricts the quantity demanded but not the quantity supplied
C) restricts the quantity supplied but not the quantity demanded
D) has no effect
2. A rent ceiling below the equilibrium price will encourage
A) a larger number of apartments rented
B) a more efficient allocation of housing
C) no change in the number of apartments rented
D) increased search time and black markets
3. In the absence of a minimum wage, a leftward shift of the supply curve
A) increases demand
B) lowers the equilibrium wage
C) raises the equilibrium wage
D) None of the above answers is correct.
4. An effective minimum wage is a price
A) ceiling that results in a surplus of low-skilled labor
B) floor that results in a shortage of low-skilled labor
C) ceiling that results in a shortage of low-skilled labor
D) floor that results in a surplus of low-skilled labor
5. A binding minimum wage creates
A) inefficiency because it causes too much job search
B) efficiency because few workers lose their jobs
C) efficiency because it increases most workers’ wages
D) inefficiency because it decreases productive unemployment
6. Price ceilings are primarily target to help ____________, while price floors generally
benefit ___________________.
A) producers; no one
B) increase tax revenue for governments; producers
C) increase tax revenue for governments; consumers
D) producers; consumers
E) consumers; producers
7. In the figure above, if the government imposes a price ceiling of $2, the result will be
A) equilibrium
B) excess supply
C) no different than before the price ceiling is imposed
D) excess demand
E) demand will shift leftward and supply will shift rightward
8. In the figure above, if the government imposes a price floor of $2, the result will be
A) equilibrium
B) excess supply
C) excess demand
D) demand will shift leftward
E) supply will shift rightward
9. According to the graph above, a binding price ceiling would exist at a price of
A) $14
B) $12
C) $10
D) $8
10. According to the graph above, if the government imposes a binding price floor of $14
in the market, the result would be a
A) surplus of 20
B) surplus of 40
C) shortage of 20
D) shortage of 40
11. According to the graph shown, with a price ceiling present in this market, when the
supply curve for gasoline shifts from S1 to S2,
A) the price will increase to P3
B) a surplus will occur at the new market price of P2
C) the market price will stay at P1 due to the price ceiling
D) a shortage will occur at the price ceiling of P2
12. Without the price ceiling in the market for gasoline shown above, when the supply
curve shifts from S1 to S2, the price will
A) increase to P3, but a shortage will still exist
B) increase to P3 and the market will clear (equilibrium quantity will be sold)
C) remain at P1 and a shortage will exist
D) eventually move to P2 without government assistance
13. Under rent control, tenants can expect
A) lower rent and higher quality housing
B) lower rent and lower quality housing
C) higher rent and higher quality housing
D) higher rent and lower quality housing
14. When a quota is imposed on a market
A) the quota is only effective if it exceeds market equilibrium quantity
B) the supply price will always exceed the demand price
C) the demand price will always exceed the supply price
D) both A and C
Answer Key
1. D
2. D
3. C
4. D
5. A
6. E
7. D
8. A
9. D
10. B
11. D
12. B
13. B
14. C