Liberty University ECON 213 Quiz 4 Complete Solutions Correct Answers Key

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Liberty University ECON 213Quiz 4Complete Solutions Correct Answers KeyQuestion 1 Why does a shortage that occurs under a binding price ceiling decrease over time?Question 2 ____________ is a reallife example of a price floor.Question 3 You are the president of the United States. In an attempt to make gasoline pricescheaper, you have imposed a binding price ceiling on gas. What would you expect your critics tosay?Question 4 Use the following information to answer the questions that follow. Market for usedcars: Demand: Qd = 154,000–86 P Supply: Qs =–100 + 14 P What would be the quantitydemanded if a price ceiling is set at $2,000?Question 5 What is the incentive to create a black market when a binding price ceiling exists?Question 6 Suppose you live in a community with no price controls. What do you expect tohappen if your town borders a community where there is a binding price floor on most products?Question 7 Use the following information to answer the questions that follow. Market for usedcars: Demand: Qd = 154,000–86 P Supply: Qs =–100 + 14 P What would be the quantitydemanded if a price ceiling is set at $1,000?Question 8 A reallife example of a binding price ceiling is:Question 9 Apartment rent control in New York City is an example of:Question 10 What will happen in a market where a binding price floor is removed?Question 11 Use the following information to answer the questions that follow. Market for flat-screen TVs: Demand: Qd = 2,600–5 P Supply: Qs =–1,000 + 10 P What would be the quantitydemanded if a price ceiling is set at $150?Question 12 Refer to the accompanying figure. At the price of the binding price floor, by howmuch would the quantity supplied change from the market equilibrium?Question 13 What is a black market?Question 14 You would expect there to be many customers for a black market good when theopportunity cost of finding the good under a:Question 15 Tina, an economics student, was just named Miss Florida, based in part on her

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answer to the question of why price gouging laws should be relaxed in that state. Tina wonbecause she gave which of the following answers?Question 16 Use the following table to answer the questions that follow. What is the equilibriumquantity in the market for public transportation?Question 17 Use the following table to answer the questions that follow. What will be the amountof government expenditure required if a price floor for corn is set at $4.50 and the governmentagrees to purchase the amount of disequilibrium?Question18Whatistheamountoftheshortageorsurplusinthemarketforpublictransportation when the price ceiling is $1.75?Question 19 As the time frame shifts from the short run to the long run, what happens toproducers who are subject to a binding price floor?Question 20 Refer to the accompanying table to answer the questions that follow. If rent controlis established at $1,550, what would be the amount of disequilibrium in the apartment market?Version 2Question 1 Refer to the accompanying figure. At what price would there be the least pressure toform a black market?Question 2 Do all buyers benefit from a binding price ceiling?Question 3 Refer to the accompanying table to answer the questions that follow. At what pricelevel does the apartment market reach equilibrium?Question 4 Why are binding price floor laws passed?Question 5 Why is raising the minimum wage generally ineffective?Question 6 Refer to the accompanying figure to answer the questions that follow. The market iscurrently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much wouldthe quantity demanded change?Question 7 Refer to the accompanying figure, which shows both short-run and long-run demandand supply curves. If there is a $4 binding price ceiling imposed on a pharmaceutical drug, what

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will be the amount of the disequilibrium in the short run?Question 8 Use the following information to answer the questions that follow. Market for a newhardcover book: Demand: Qd = 325–8 P Supply: Qs =–60 + 3 P What would be the equilibriumprice for hardcover books?Question 9 What would you expect the consequences to size and quality would be for a productsold under a binding price ceiling?Question 10 Use the following figure to answer the questions that follow. The accompanyingfigure describes the market for gasoline in a local community. If the government were to place aprice floor at P1, predict the resulting surplus or shortage.Question 11 What is the longrun consequence of a price ceiling law?Question 12 Let’s say that you have a friend who was caught illegally buying a good on the blackmarket. When the judge asks you to describe your friend’s motivation as a buyer, which of thefollowing would most likely be your reply?Question 13 Refer to the accompanying figure. At the price of the binding price floor, by howmuch would the quantity supplied change from the market equilibrium?Question 14 A nonbinding price floor has the following consequences:Question 15 How do producers who are subject to a binding price ceiling respond as the timeframe shifts from the short run to the long run?Question 16 Let’s say that you have a friend who was caught illegally selling a good on the blackmarket. When the judge asks you to describe your friend’s motivation as a seller, which of thefollowing would most likely be your reply?Question 17 If a good is subject to a binding price ceiling and you purchase it on the blackmarket, what do you expect to happen to the availability of the good over time?Question 18 Refer to the accompanying figure to answer the questions that follow. The market iscurrently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much wouldthe quantity supplied change?Question 19 You are the president of the United States. In an attempt to make prescription drugprices cheaper, you have imposed a binding price ceiling on drugs. What would you expect your

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