Economics Concepts

What is a price ceiling in economics?

• A government-imposed maximum price that can be charged for a particular good or service.

• A government-imposed tax on a particular good or service.

• A price floor set by the market to ensure fair competition.

• A government-imposed minimum price that can be charged for a particular good or service.

What is a price floor in economics?

• A government-imposed minimum price set above the equilibrium price in a market.

• A government-imposed price set below the equilibrium price in a market.

• A government-imposed price set at the equilibrium price in a market.

• A government-imposed maximum price set below the equilibrium price in a market.

Define surplus in economics.

• Excess of supply over demand at a given price.

• The total amount of goods and services produced in an economy.

• Excess of demand over supply at a given price.

• The difference between total revenue and total cost in a business.

Define shortage in economics.

• Demand exceeds supply

• Supply exceeds demand.

• There is no scarcity.

• Equilibrium is reached.

What are the effects of a price ceiling on the market?

• Increased supply, improved quality, increased competition

• Higher prices, increased demand, improved efficiency

• Increased consumer surplus, increased market stability, improved allocation of resources

• Shortages, reduced quality, black markets, and inefficiency.

What are the effects of a price floor on the market?

• A price floor has no effect on the market and does not impact supply or demand.

• A price floor leads to a surplus of the good or service and can result in inefficiency and deadweight loss.

• A price floor leads to perfect competition and maximizes consumer surplus.

• A price floor leads to a shortage of the good or service and can result in higher prices.

How does a surplus affect the market?

• A surplus affects the market by putting downward pressure on prices and potentially increasing production.

• A surplus affects the market by stabilizing prices and increasing production.

• A surplus affects the market by putting downward pressure on prices and potentially reducing production.

• A surplus affects the market by putting upward pressure on prices and potentially increasing production.

How does a shortage affect the market?

• A shortage creates an imbalance between supply and demand, leading to higher prices and potential rationing of the limited supply.

• A shortage has no effect on the market.

• A shortage leads to lower prices and increased supply.

• A shortage only affects the demand side of the market.

What are some examples of price ceilings in real-world markets?

• Tariffs on imported goods and quotas on production.

• Rent control laws and price controls on essential goods during times of crisis.

• Minimum wage laws and subsidies on agricultural products.

• Tax breaks for certain industries and government subsidies for housing.

What are some examples of price floors in real-world markets?

• Sales tax, import tariffs, and subsidies.

• Price gouging laws, anti-dumping duties, and export quotas.

• Tax credits, rebates, and vouchers.

• Minimum wage laws, agricultural price supports, and rent control.