Rent controls are a typical example of a price ceiling. Please select all likely consequences of rent controls when the price ceiling is binding. There is more than one correct answer. surplus of affordable housing inefficient allocation of apartments shortage of affordable housing reductions in apartment quality

Rent controls are a typical example of a price ceiling. Please select all likely consequences of rent controls when the price ceiling is binding. There is more than one correct answer. surplus of affordable housing inefficient allocation of apartments shortage of affordable housing reductions in apartment quality

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 6MC

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In a market with a price ceiling, the price is: Group of answer choices No answer text provided. actually the equilibrium price because the price ceiling has no effect on the market. set lower than the equilibrium price and represents the government mandated maximum price. set higher than the equilibrium price and represents the government mandated maximum price.
In a market with a price floor, the price is Group of answer choices A: set higher than the equilibrium price and represents the government mandated minimum price. B: set lower than the equilibrium price and represents the government mandated minimum price. C: actually the equilibrium price because the price ceiling has no effect on the market.
The imosition of a price ceiling on a market will result in
The total amount of consumer surplus and producer surplus is at its maximum when A. consumers and producers are allowed to trade at the market clearing price. B. free market exchanges do not exist. C. the government imposes a price floor that is higher than the market clearing price. D. the government imposes a price ceiling that is lower than the market clearing price.
Suppose the government sets a Price Ceiling at $5. If the market equilibrium price is $3, the Price Ceiling will be: Select one: a. binding. b. effective. c. illegal. d. non-binding.
Which of the following is the most likely result of a rent control law that creates a binding price ceiling? A) The quality of rental homes will increase. B) A surplus of rentable homes C) All people will be able to rent a home. D) A shortage of rentable homes
Consider a market that is initially in equilibrium and the equilibrium price and quantity are P and Q respectively. Then, the government decides to impose a price ceiling at a price of Pc that is less than P. Which of the following statements is correct? 1. After the price ceiling is imposed, the quantity demanded is less than the quantity supplied on the market. 2. After the price ceiling is imposed, the quantity actually sold in the market is lower than it was before the price ceiling was imposed. 3. Producer surplus in the market increased after the price ceiling was imposed. 4. Since Pc is less than P, the price ceiling is effective and therefore, there is no deadweight loss in the market.
What will a price ceiling always create? Shortage surplus a clear market
An increase in an effective price ceiling will do what in the relevant market? a. The surplus will increase.b. The surplus will decrease.c. The shortage will increase.d. The shortage will decrease.
To halt the continued rise in the price of gasoline, the government implements a price ceiling, where the price of gas is not allowed to rise above $3 a gallon. If the price ceiling was not in place, the price of gas would equal $3.75 a gallon. The price ceiling has what effect on the sum of producer and consumer surplus in the market:
The following graph shows the annual market for Florida oranges, which are sold in units of 90-pound boxes. True or False: A price ceiling above $25 per box is a binding price ceiling in this market. (Hint: Economists call a price ceiling that prevents the market from reaching equilibrium a binding price ceiling.)
Suppose the demand for live comedy performance tickets is downward sloping and the supply of live comedy performance tickets is upward sloping. Lovers of comedy persuade Congress to impose a price ceiling of $40 per ticket for live comedy performances. True or False: If the equilibrium price of live comedy performance tickets were $40, a price ceiling of $40 will cause more people to attend comedy performances than if there is no price control.