Prices Chapter Review

What is the government’s goal in buying excess crops or other agricultural products?

• to raise minimum wage

• to set a price floor

• to set legal price ceilings

• to lower prices

Which of the following are ways the government controls markets?

• price ceilings and price floors

• equilibrium price and equilibrium point

• shortages and surpluses

• None of the above

Why does a government place price ceilings, such as rent control, on some “essential” goods?

• to keep people from starting new businesses

• to encourage businesses to produce more

• to keep the goods from becoming too expensive

• to lower demand for these goods

What happens after the demand for a fad drops?

• The quantity supplied goes down, and the price goes up.

• The quantity supplied and the price both go up.

• Shortage makes the good difficult to obtain.

• Excess supply makes the good easy to obtain.

What happened when the supply of digital cameras increased?

• The supply curve moved to the left.

• The supply curve moved to the right.

• The demand curve moved to the right.

• The demand curve moved to the left.

What did suppliers do when the supply of digital cameras increased?

• Suppliers could not keep up with demand for cameras.

• Suppliers decreased their inventory of digital cameras.

• Suppliers raised prices on cameras.

• Suppliers lowered prices on cameras.

How do price changes drive markets toward equilibrium?

• They set new price floors and ceilings.

• They increase or decrease supply or demand.

• They ensure more people buy chipotle

• They prevent inflation or deflation.

How does rationing encourage black markets?

• Rationing creates high demand.

• Rationing causes criminal behavior.

• Rationing creates high supply.

• Rationing wrecks the market.

What does a low price tell suppliers?

• Not enough of a product is being produced.

• Too much of a product is being produced.

• Demand for a product will go up.

• Demand for a product will go down.

On which kinds of goods do governments generally place price ceilings?

• those that are cheap but could become more expensive without the ceiling

• those that are not necessary but have become customary

• those that are essential and cheap

• those that are essential but too expensive for some consumers