AP Micro - 2.8 - (PT 1) The Effects of Government Intervention

A price ________ is a type of government price floor that sets a minimum price at which a good can be sold (the good cannot be bought or sold for lower than this price)

• floor
• ceiling

A price ________ is a type of government price floor that sets a maximum price at which a good can be sold (the good cannot be bought or sold for higher than this price)

• floor
• ceiling

This graph shows an example of which type of government price control?

• price floor

• price ceiling

Based on the graph, which of the following statements is true?

• The price floor will be non-binding

• The price floor will lead to a surplus

• There price floor create an allocatively efficient market

• The price floor will increase consumer surplus, compared to the natural equilibrium

Based on the graph, consumer surplus decrease by an area of ________ after the price floor is implemented?

• A

• B + C

• C + E

• D + E

Which of the following areas represents deadweight loss after the price floor is implemented?

• C + E

• B + C

• B + D

• A + B

Assume that a price ceiling is administered at $3. What impact will this have on the quantity exchanged?

• The quantity exchanged will decrease

• The quantity exchanged will increase

• The quantity exchanged will remain unchanged