Economics Quiz: Price Controls and Subsidies

What is the term for a law that sets a minimum price in a specific market?

• Price ceiling

• Subsidy

• Price floor

• Equilibrium price

What is the result of a price ceiling that is set below the equilibrium price?

• Equilibrium

• Shortage

• Surplus

• Deadweight loss

What is the main problem with price ceilings on rent according to economists?

• Improved landlord responsiveness

• Lower rent prices

• Decreased housing quantity

• Increased housing quality

What is the main concern economists have with agricultural subsidies?

• They discourage innovation

• They increase market efficiency

• They reduce deadweight loss

• They benefit all farmers

What is the purpose of a subsidy given to individuals or businesses?

• To increase market efficiency

• To create false demand

• To offset costs and advance a public goal

• To reduce demand for a specific product

What is the result of a price floor that is set above the equilibrium price?

• Surplus

• Shortage

• Equilibrium

• Deadweight loss

What is the main argument against farm subsidies according to economists?

• They discourage farmers from innovating

• They increase market efficiency

• They reduce deadweight loss

• They benefit all farmers

What is the effect of a subsidy on renewable energy technology according to some economists?

• It increases deadweight loss

• It reduces market efficiency

• It creates false demand

• It reduces deadweight loss

What was the main purpose of the Agricultural Adjustment Act of 1933?

• To stabilize farm prices

• To increase farm subsidies

• To eliminate direct payments

• To reduce farm production

What is the result of a price ceiling that is set below the equilibrium price?

• Equilibrium

• Shortage

• Surplus

• Deadweight loss