An effective price ceiling on a good or service ________________________.

increases the price of the good or service
occurs only in the market for rental housing
creates a shortage of the good or service
benefits everyone who plans to buy the good or service

Sherry wants to rent an apartment. Although rents are below what she is willing to pay, she cannot find an apartment. Then after a month of searching, she finds an apartment but she has to pay an additional $1,000 to have the locks changed. Sherry has just experienced the effects of ___________________.

a rent floor with a black market
inelastic demand
a market working efficiently
a rent ceiling

Suppose the government imposes a price ceiling on staplers. When the quantity demanded of staplers exceeds the quantity supplied, ____________________________.

the price of a stapler will fall
the supply of staplers will increase
the demand for staplers will decrease
there is incentive for students to undertake search activity

If the government of Easy Life imposes a rent ceiling but does not enforce it, then the actual quantity of housing rented will be close to the unregulated equilibrium quantity because ___________________.

people will undertake search activity
the supply of rental housing is perfectly elastic
Easy Life has lots of high-rise apartment buildings
a black market will exist

A minimum wage _______________________.

is a price ceiling in the labor market
is an effective way of increasing employment
changes the demand for labour.
is a price floor in the labor market

Hair shampoo has a _______ and _______ pay most of the tax levied on hair shampoo.

low elasticity of supply; buyers
high elasticity of demand; buyers
high elasticity of supply; sellers
low elasticity of demand; buyers

Which of the following outcomes is not a result of a tax on gasoline?

Demand decreases, the market becomes more efficient, and the price rises.
Supply decreases, a deadweight loss is created, and the price rises.
Demand does not change, the price rises, and consumer surplus decreases.
The market becomes less efficient and the government collects the tax revenue.

The more elastic is the demand for a good, the _____________ likely will the government tax that good. But if the good is taxed, the ______________ is the amount of the tax paid by the buyer of the good.

more; smaller
less; larger
more; larger
less; smaller

Governments intervene in agricultural markets by ___________________________.

keeping prices and inventories high
keeping surpluses small and prices stable
stabilizing prices and equalizing the incomes of all farmers
setting price floors, production limits, and holding inventories

Speculation in inventories of farm produce makes _______________ than it would in an unregulated market.

the price of the good fluctuate less
the price of the good fluctuate more
the quantity produced fluctuate less
the quantity produced fluctuate more

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