#1
What is a price ceiling?
A maximum price set by the government below the equilibrium price
ExplanationGovernment-set maximum price below market equilibrium
#2
Which of the following is an example of a price floor?
Minimum wage
ExplanationLegal minimum price for labor
#3
What is the term used to describe the situation when a price floor is set above the equilibrium price?
Surplus
ExplanationExcess supply due to price floor
#4
Which of the following is an example of a government-imposed price ceiling?
Rent control
ExplanationGovernment regulation on maximum rent prices
#5
What term describes the difference between the price consumers are willing to pay and the price they actually pay?
Consumer surplus
ExplanationExcess utility gained by consumers from price difference
#6
What is the main purpose of price controls?
To address market inefficiencies or inequities
ExplanationIntervention to rectify market distortions
#7
What is a potential consequence of imposing a price ceiling below the equilibrium price?
Excess demand
ExplanationDemand exceeds supply due to price restriction
#8
What is the primary goal of a price floor?
To prevent prices from falling below a certain level
ExplanationSetting a minimum price to support sellers
#9
Which of the following is a potential drawback of price controls?
Reduced consumer choice
ExplanationLimitation on variety or options for consumers
#10
Which of the following is a consequence of implementing price controls in a market?
Potential shortages or surpluses
ExplanationPossible imbalances between supply and demand
#11
In the context of market interventions, what is deadweight loss?
The loss in consumer surplus exceeding the gain in producer surplus
ExplanationNet loss of economic efficiency from intervention
#12
What is the likely effect of removing a price ceiling below the equilibrium price?
Increase in quantity supplied
ExplanationMarket response leading to higher supply levels
#13
What economic concept is illustrated by the area between the supply and demand curves below the price ceiling?
Deadweight loss
ExplanationEfficiency loss due to market distortion
#14
What economic concept is represented by the area of deadweight loss?
Loss in consumer surplus exceeding gain in producer surplus
ExplanationNet reduction in economic welfare from market distortion
#15
What economic concept is indicated by the loss in total surplus due to market intervention?
Deadweight loss
ExplanationEfficiency reduction from market distortion