ECO 204 Quiz 04

1. 1. Which of the following is an example of a price floor?

• A Rent control

• B. Subsidies for farmers

• C. Minimum wage

• D. Import tariffs

2. 2. What does a tax on a good do to the supply curve?

• A. Shifts it to the left

• B. Shifts it to the right

• C. Leaves it unchanged

• D. Makes it steeper

3. 3. Why does a binding price floor cause a surplus?

• A. It increases demand and decreases supply.

• B. It sets the price below equilibrium.

• C. It reduces the elasticity of demand.

• D. It causes quantity supplied to exceed quantity demanded.
  
  

4. 4. Why does a binding price ceiling lead to inefficiency?

• A. It encourages overproduction.

• B. It creates black markets and unmet demand.

• C. It reduces deadweight loss.

• D. It eliminates equilibrium.

5. 5. What happens when a price floor on wheat is removed?

• A. Quantity supplied increases.

• B. Quantity demanded decreases.

• C. Surplus is eliminated, and the market returns to equilibrium.

• D. The market experiences a shortage.

6. 6. A government imposes a $1 tax per unit on sellers. If the market price rises by $0.60, how much of the tax burden falls on consumers?

• A. 60%

• B. 40%

• C. 100%

• D. 0%

7. What is the result of a binding price ceiling on gasoline during a supply shock?

• A. Higher prices and greater efficieny.

• B. Surplus of gasoline.

• C. No effect on the market.

• D. Shortages and long lines at gas stations.

8. What is the effect of taxes on consumer and producer surplus?

• A. Both surpluses increase.

• B. Both surpluses decrease.

• C. Consumer surplus increases while producer surplus decreases.

• D. Only producer surplus decreases.

9. Why might governments choose not to impose price ceilings in most markets?

• A. Price ceilings encourage excess supply.

• B. Price ceilings lead to inefficiency and black markets.

• C. Price ceilings reduce tax revenue.

• D. Price ceilings increase consumer surplus significantly.

10. Why might a price ceiling on apartments lead to discrimination in the rental market?

• A. Landlords prioritize tenants who offer higher bribes.

• B. Landlords face lower competition among renters.

• C. Renters have more housing options available.

• D. The market becomes more efficient.