6 - Chapter 6 Supply, Demand, and Government Policies...

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Chapter 6 Supply, Demand, and Government Policies MULTIPLE CHOICE 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 . Policymakers choose to enact price controls in a market because a. they believe the market’s outcome to be unfair. b. enacting price controls will directly increase tax revenues. c. they are required by law to improve market conditions. d. they believe that the market system is inefficient and their actions will improve efficiency. 3 . Policymakers are led to control prices because a. they view the market’s outcome as inefficient. b. they view the market’s outcome as unfair. c. all politicians enjoy exercising their power. d. they are required to do so under the Employment Act of 1946. 4 . Price controls a. always produce an equitable outcome.
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b. always produce an efficient outcome. c. can generate inequities of their own. d. produce revenue for the government. 5 . Which of the following is a reason policymakers impose taxes? a. to attempt to make markets more efficient b. to influence market outcomes c. to raise revenue for public use d. All of the above are correct. e. Both b and c are correct. 6 . A legal maximum price at which a good can be sold is a price a. floor. b. stabilization. c. support. d. ceiling. 7 . A government-imposed maximum price at which a good can be sold is called a price a. floor. b. ceiling. c. support. d. equilibrium. 8 . A price ceiling a. is a legal maximum on the price at which a good can be sold.
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b. is a legal minimum on the price at which a good can be sold. c. occurs when the price in the market is temporarily above equilibrium. d. will usually result in a market surplus. 9 . A legal minimum price at which a good can be sold is a price a. cut. b. stabilization. c. ceiling. d. floor. 10 . A price floor a. is a legal minimum on the price at which a good can be sold. b. is a legal maximum on the price at which a good can be sold. c. will generally result in a market shortage. d. will benefit the consumer, but hurt the supplier. 11 . 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.
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This note was uploaded on 11/24/2010 for the course ECON 1003 taught by Professor None during the Spring '10 term at University of Florida.

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6 - Chapter 6 Supply, Demand, and Government Policies...

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