eLearn Economics

Q1

QUESTION:

Which of the following is most likely to result in a long-run shortage of a good or service?

A price control that is set by the the government below the equilibrium price .

An effective minimum price.

A price control that is set by the the government above the equilibrium price .

An increase in the number of firms producing the good or service.

Q2

QUESTION:

The market equilibrium is $400. If the government imposes a maximum price of $250, quantity supplied will ___________, quantity demanded will __________ and the price will __________.

increase; decrease; decrease

decrease; increase; decrease

decrease; increase; increase

increase; decrease; increase

Q3

QUESTION:

A __________ can be set by the government in the interests of consumers to make products more affordable.

maximum price control

price control

minimum or maximum price control

minimum price control

Q4

QUESTION:

A __________ can be set by the government in the interests of producers to protect them from volatile world prices.

maximum price control

minimum price control

price control

minimum or maximum price control

Q5

QUESTION:

Market equilibrium will occur:

where demand equals supply

at the price where demand equals supply

at the price decided by the seller

at the price where quantity demanded equals quantity supplied

Q6

QUESTION:

What is the main disadvantage of a price control?

It will result in excess demand

The market will not clear

It is likely to be more effective than a free market

The government has a better idea of what people need rather than business owners

Q7

QUESTION:

What are price controls?

A form of price competition used by firms to maximise profits

Government restricting the ability of a business to change prices

A government policy designed to improve on the market allocation of resources

The ability of a firm to raise or lower prices in response to market disequilibrium

Q8

QUESTION:

If there is a shortage in the market then price will:

increase, the quantity demanded will increase and the quantity supplied will decrease

decrease, the quantity demanded will increase and the quantity supplied will decrease

increase, the quantity demanded will decrease and the quantity supplied will increase

decrease, the quantity demanded will increase and the quantity supplied will increase

Q9

QUESTION:

Which of the following will occur if the government establishes a price ceiling at P3?

A surplus of 400 houses for rent.

A shortage of 400 houses for rent.

A shortage of 900 houses for rent.

Neither a surplus or shortage.

Q10

QUESTION:

A maximum (ceiling) price control set below the equilibrium for rental properties will __________ the number of houses available for consumers causing a __________.

decrease; shortage

increase; surplus

increase; shortage

decrease; surplus

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Topic List

Price Controls-Maximum Price

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