In a market with supply and demand curves as shown above, a price ceiling of $2.50 will result in

139. In a competitive market illustrated by the diagram above, a price floor of $25 per unitwill result in:A.A shortage of 200 unitsB.A surplus of 200 unitsC.A surplus of 250 unitsD.A shortage of 250 units140. In a competitive market illustrated by the diagram above, a price ceiling of $10 per unitwill result in:A.A shortage of 200 unitsB.A surplus of 200 unitsC.A surplus of 250 unitsD.A shortage of 250 units141. In a competitive market illustrated by the diagram above, a price ceiling of $25 per unitwill result in:A.The market staying at an equilibrium price of $15B.A surplus of 200 unitsC.A shortage of 200 unitsD.A shortage of 150 units3-58

Chapter 03 - Demand, Supply, and Market Equilibrium (+ Appendix)142. In a competitive market illustrated by the diagram above, for a price floor to be effectiveand alter the market situation, it must be set:A.At $15B.Below $15C.Above $15D.At $10143. If a price ceiling is set below the equilibrium price in a market:A.Rationing will be unnecessaryB.Surpluses of the commodity will developC.The quantity demanded will exceed the quantity suppliedD.The quantity supplied will exceed the quantity demanded3-59

Chapter 03 - Demand, Supply, and Market Equilibrium (+ Appendix)144. Consider the supply and demand curves depicted in the diagram above. If the market wasinitially at equilibrium, but the government then imposed a price ceiling of $15, then the totalrevenue received by suppliers would:A.Remain unchangedB.Fall by $30C.Fall by $120D.Fall by $240145. Consider the supply and demand curves depicted in the diagram above. If thegovernment imposed a price ceiling of $15, then buyers will be able to legally buy:A.24 unitsB.30 unitsC.36 unitsD.50 units146. Consider the supply and demand curves depicted in the diagram above. If thegovernment imposed a price ceiling of $10, then sellers will be willing to sell:A.24 unitsB.36 unitsC.50 unitsD.0 units3-60

Chapter 03 - Demand, Supply, and Market Equilibrium (+ Appendix)147. In a market with supply and demand curves as shown above, a legal price ceiling of$2.50 will result in:A.A surplus of 10 unitsB.A shortage of 10 unitsC.No shortage or surplusD.A black market price greater than $2.50148. Government-set price floors and price ceilings:A.Do not affect the rationing function of price in a free marketB.Interfere with the rationing function of price in a free marketC.Result in surpluses of products in markets where they are usedD.Result in shortages of products in markets where they are used3-61

Chapter 03 - Demand, Supply, and Market Equilibrium (+ Appendix)

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Chapter 03 - Demand, Supply, and Market Equilibrium (+ Appendix)3-61149. Which is most likely to be observed in a community where legal ceilings are imposed onresidential rents?A.Poor people will be able to find adequate housingB.Tenants will reduce their use of housing space, making more available for othersC.Those whose needs for housing are most urgent will be able to obtain the space they wantD.People moving into the community will have difficulty locating residential space to rentAACSB: Reflective ThinkingBloom's: Level 2 UnderstandDifficulty: 3 HardLearning Objective: 03-05 Identify what government-set prices are and how they can cause product surpluses and shortages.Topic: Application: Government-Set PricesAnswer the next question(s) based on the following supply and demand schedules in units perweek for a product.150. Refer to the above table. If the government introduced a guaranteed price floor of $40and agreed to purchase surplus output, then the government's total support payments toproducers would be:A.$3,000 per weekB.$3,500 per weekC.$4,000 per weekD.$2,500 per weekAACSB: AnalyticBloom's: Level 3 ApplyDifficulty: 3 HardLearning Objective: 03-05 Identify what government-set prices are and how they can cause product surpluses and shortages.Topic: Application: Government-Set Prices

What happens to supply and demand when there is a price ceiling?

What is the effect of a price ceiling that is set above the market equilibrium?

When a price floor is set above the equilibrium price the result will be?

What will happen when there is a shortage in a market?