Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305134935
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 4QR
To determine
The reason why economists oppose price controls.
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Explain why economists usually oppose controls on prices.
. Explain why economists usually oppose price control
Why do most economists oppose price ceilings and price floor? What are their negative consequences?
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Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + Aplia, 1 term Printed Access Card
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- When policymakers set controls on prices, they obscure the signals that guide the allocation of society’s resources. Further, price controls often hurt those they are trying to help. Select one: a.False b.Truearrow_forwardhow can price controls be used to avoid prices from increasing furtherarrow_forwardWhat happens if a government imposes price controls that require a selling price that is ABOVE the equilibrium price? A. SHORTAGE. That shortage then puts a pressure on prices to DROP toward equilibrium. B. SHORTAGE. That shortage then puts a pressure on prices to RISE toward equilibrium. C. SURPLUS. That surplus then puts a pressure on prices to DROP toward equilibrium. D. SURPLUS. That surplus then puts a pressure on prices to RISE toward equilibrium. What happens if a government imposes price controls that require a selling price that is BELOW the equilibrium price? A. SHORTAGE. That shortage then puts a pressure on prices to DROP toward equilibrium. B. SHORTAGE. That shortage then puts a pressure on prices to RISE toward equilibrium. C. SURPLUS. That surplus then puts a pressure on prices to DROP toward equilibrium. D. SURPLUS. That surplus then puts a pressure on prices to RISE toward equilibrium.arrow_forward
- What can cause a price ceiling to become nonbinding?arrow_forwardWhich of the following is a general sustain downward moment of prices for goods and service in an economy? Which of the following is a common criticism of government price controls?arrow_forwardExplain why economist usually oppose controls on prices.arrow_forward
- Which of the following is NOT a way that the government can intervene in markets? a)The government can set minimum wages. b)The government can raise taxes on a particular item. c)The government can pass laws on sales taxes. d)The government can stop the forces of demand and supply from working in markets.arrow_forwardIf there is a decrease in supply and demand, how will equilibrium price and quantity be affected?arrow_forwardWhich policy increases the consumption of a good? a price floor/a price ceiling / a subsidy/ a taxarrow_forward
- if the price ceiling of a good is set AT the Equalibrium Price, is it non binding?arrow_forwardAfter the OPEC oil embargo in the 1970s, price controls were placed on gas markets that did not allow price to rise to the market clearing level. Gas shortages resulted as did black markets. Use the analysis of price controls to discuss whether price controls likely hurt or helped consumers and the economy. Consider the following: Who is helped and harmed by price ceilings? Had gas prices been allowed to increase sharply, would we have made changes in our economy faster? At what cost? How does the elasticity of demand and supply impact the degree to which price and quantity would change in the gasoline market?arrow_forwardWhen the government imposes a binding price floor, it causes which of the following to occur? Select one: a. the demand curve to shift to the right b. a shortage of the good to develop c. a surplus of the good to develop d. the supply curve to shift to the leftarrow_forward
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