Supply, Demand, and Government Policies

The lowest legal price that can be paid for a product:

• Price

• Price Ceiling

• Price Floor

• Surplus

Price where quantity supplied equals quantity demanded.

• Equilibrium price

• Equilibrium quantity

• Price floor

• Price

Price floor for agricultural products set by the government to stabilize farm prices:

• Surplus

• Price

• Equilibrium quantity

• Target price

What effect would a bumper crop most likely have on the price of that crop?

• Increase

• Decrease

• Equilibrium

• Floor

Which term best describes rent control?

• Price ceiling

• Subsidy

• Equilibrium price

• Nonrecourse

Which of the following is an advantage of setting a price ceiling?

• Suppliers maximize their profits.
• Consumers can purchase as much as they want. 
• Consumers can continue to afford an essential good or service. 
• The market will be forced into equilibrium.

What is government intervention?

• taxes and subsidies

• is any action carried out by the government or public entity that affects the market economy

• when employees of the government decide to take action after contemplation whilst creating economic models to predict market economy

• a consequence of an industrial or commercial activity which affects other parties in turn being reflected in market prices

A black market is 

• a market in which there are high barriers to entry and homogeneous products.
• a market with only one supplier and unlimited demand.
• a market where there are many buyers and sellers and few consumers.
• a market in which sellers illegally sell to buyers at higher than legal prices

Which of the following is the most likely explanation for the imposition of a minimum price in the market for corn?

• Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

• Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

• Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor.

• Policy makers have studied the effects of the price floor carefully and recognize that the price floor is advantageous for society as a whole.

If the government levies a $2 tax per DVD on buyers of DVDs, then the price received by sellers of DVDs would

• decrease by more than $2.
• decrease by exactly $2.
• decrease by less than $2.
• increase by an indeterminate amount.