Chapter 6(sample exercise)

Chapter 6(sample exercise) - Chapter 6Supply, Demand, and...

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Chapter 6—Supply, Demand, and Government Policies 1. Price controls are a. used to make markets more efficient. b. usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers. c. nearly always effective in eliminating inequities. d. established by firms with monopoly power. 2. A price ceiling will only be binding if it is set a. equal to equilibrium price. b. above equilibrium price. c. below equilibrium price. d. A price ceiling is never binding in a free market system. Figure 6-3 3. Refer to Figure 6-3 . Which of the panels represents a binding price floor? a. panel (a) b. panel (b) c. panel (a) and panel (b) d. neither panel (a) nor panel (b) 4. Refer to Figure 6-3 . In panel (b), at the actual price there will be a. a shortage of wheat. b. equilibrium in the market. c. a surplus of wheat. d. an excess demand for wheat. Figure 6-5
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5. Refer to Figure 6-5 . If the government imposes a binding price floor of $5.00 in this market, the result would be a a. surplus of 15. b. surplus of 35. c. surplus of 20. d. shortage of 20. 6. Refer to Figure 6-5 . A binding price floor would exist at a price of a. $5.00.
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This note was uploaded on 01/07/2010 for the course ECO eco1104 taught by Professor Davidgray during the Fall '09 term at University of Ottawa.

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Chapter 6(sample exercise) - Chapter 6Supply, Demand, and...

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