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ex Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. In a competitive market free of government regulation, a. price adjusts until quantity demanded is greater than quantity supplied. b. price adjusts until quantity demanded is less than quantity supplied. c. price adjusts until quantity demanded equals quantity supplied. d. supply adjusts to meet demand at every price. ____ 2. A legal maximum on the price at which a good can be sold is called a price a. floor. b. subsidy. c. support. d. ceiling. ____ 3. A price ceiling is a. often imposed on markets in which cutthroat competition would prevail without a price ceiling. b. a legal maximum on the price at which a good can be sold. c. often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. d. All of the above are correct. ____ 4. If a price ceiling is not binding, then a. the equilibrium price is above the price ceiling. b. the equilibrium price is below the price ceiling. c. it has no legal enforcement mechanism. d. More than one of the above is correct. ____ 5. If a price ceiling is not binding, then a. there will be a surplus in the market. b. there will be a shortage in the market. c. the market will be less efficient than it would be without the price ceiling. d. there will be no effect on the market price or quantity sold. ____ 6. A price ceiling is binding when it is set a. above the equilibrium price, causing a shortage. b. above the equilibrium price, causing a surplus. c. below the equilibrium price, causing a shortage. d. below the equilibrium price, causing a surplus. ____ 7. Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? ... View Full Document

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