Microeconomics Quiz - Govt policies

What is a price ceiling in microeconomics?

• A set amount per unit of expenditure

• A legal minimum on the price at which a good can be sold

• A legal maximum on the price at which a good can be sold

• A payment to buyers and sellers to supplement income

What is a likely long-term consequence of rent controls?

• Increased investment in housing

• Decreased supply of rental properties

• Higher quality housing

• Equilibrium in the rental market

What is the impact of a price floor being binding?

• Increase in supply

• Equilibrium price

• Shortage

• Surplus

What is the primary effect of setting a price ceiling below the equilibrium price?

• Increase in demand

• Increase in supply

• Creation of a shortage

• Creation of a surplus

What is the impact of a subsidy on the supply curve?

• Shifts the supply curve to the left

• Shifts the supply curve to the right

• Makes the supply curve more elastic

• Makes the supply curve more inelastic

In a market with a binding price ceiling, which of the following is a likely outcome?

• Decrease in the quality of the good

• Increase in the long-term supply of the good

• Stabilization of market prices

• Elimination of black markets

What is the effect of a subsidy on the price to buyers?

• It decreases

• It increases

• It becomes elastic

• It remains the same

What is the tax burden dependent on?

• The type of tax

• The price elasticity of demand and supply

• The quantity sold

• The government's revenue

Which scenario would most likely result in a larger tax burden on consumers?

• Highly elastic supply and inelastic demand

• Highly elastic demand and inelastic supply

• Both supply and demand are equally elastic

• Both supply and demand are perfectly inelastic

What is the impact of a specific tax on the price buyers pay and the price sellers receive?

• Buyers pay more and sellers receive less

• Buyers pay the same and sellers receive the same

• Buyers pay less and sellers receive more

• Both remain unchanged