Price Control

A price ceiling is

• often imposed on markets in which “cutthroat competition” would prevail without a price ceiling.
• often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
• All are correct.
• a legal maximum on the price at which a good can be sold.

The price ceiling

• causes a shortage of 45 units of the good.
• makes it necessary for sellers to ration the good.
• is not binding because it is set below the equilibrium price.
• Both orange and red are correct.

When a price ceiling is in place keeping the price below the market price, which is true of the quantity demanded & quantity supplied?

• Quantity Demanded is greater

• Quantity Supplied is greater

• Quantity Demanded equals Quantity supplied

What is the equilibrium quantity in this graph?

• $1.50
• $1.00
• 600
• 800

At the price of 1.00 there is a 

• shortage of 200
• surplus of 200
• shortage of 400
• surplus of 400

An effective price floor must be set above equilibrium, resulting in:

• a shortage
• a surplus
• limited choices
• None of the above

If the government set the price at $700, would that be a price ceiling or floor?

• Price Ceiling
• Price Floor 
• Neither

If the government set the price at $300, what would be the result?

• Surplus of 4,000
• Surplus of 2,000
• Shortage of 4,000
• Shortage of 2,000

If the government creates a price floor of $80, which one of the following statements is correct?

• The quantity demanded = 60
• The quantity supplied = 180
• There is a shortage of 140
• There price floor is ineffective

If the government creates a price ceiling of $30, which one of the following statements is correct?

• The quantity demanded = 60
• The quantity supplied = 160
• There is a surplus of 100
• There is a shortage of 100