Chapter 7, Government Actions in Markets Video Solutions, Foundations of Microeconomics

Problem 1

A rent ceiling creates a______ of housing if it________ the equilibrium rent.
A. surplus, is less than
B. shortage; is less than
C. surplus; exceeds
D. shortage; exceeds

James Kiss

Numerade Educator

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A price ceiling imposed below the equilibrium price________.
A. creates a black market in which the price might equal or exceed the equilibrium price
B. creates a black market in which the price equals the price ceiling
C. leads to increased search activity, which reduces the shortage of the good
D. increases the demand for the good, which makes the shortage even larger

James Kiss

Numerade Educator

00:54

Problem 3

A price ceiling is________ if it is set_________ the market equilibrium price.
A. efficient and fair; below
B. unfair but efficient; equal to
C. efficient and unfair, above
D. inefficient and unfair; below

Oluwadamilola Ameobi

Numerade Educator

02:41

Problem 4

A price floor influences the outcome of a market if it is_______.
A. set below the equilibrium price
B. set above the equilibrium price
C. an incentive for buyers to increase demand for the good
D. an incentive for sellers to decrease supply of the good

Mihir Nayar

Numerade Educator

01:42

Problem 5

A minimum wage set above the market equilibrium wage rate_______.
A. increases both employment and the quantity of labor supplied
B. decreases unemployment and raises the wage rate of those employed
C. raises the wage rate of those employed and increases the supply of jobs
D. increases unemployment and decreases employment

Arrushi Agarwal

Numerade Educator

07:17

Problem 6

A minimum wage is_______.
A. efficient if the wage paid rises and more people look for jobs
B. inefficient if workers' surplus decreases and firms' surplus increases
C. inefficient if job search increases and total surplus decreases
D. efficient if workers' surplus increases and firms' surplus decreases

Pragya Ahuja

Numerade Educator

Problem 7

A support price set above the equilibrium price________.
A. creates a shortage, increases farmers' total revenue, and is efficient
B. creates a surplus, which the government buys and dumps on the rest of the world to keep the U.S. market price equal to the support price
C. is inefficient because farmers' marginal cost exceeds U.S. consumers' marginal benefit
D. is efficient because farmers' marginal cost equals US. consumers' marginal benefit

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05:17

Problem 8

Choose the best statement.
A. A subsidy to peanut growers lowers peanut growers' costs, lowers the market price of peanuts, and increases the demand for peanuts.
B. A price support for peanut growers is a guaranteed price for peanuts, which increases the quantity of peanuts produced.
C. A price support and a subsidy to peanut growers will make the peanut market more efficient if the support price is below the market price.
D. For a support price set above the equilibrium price to increase peanut growers' incomes, they must also receive a subsidy.

Pronoy Sinha

Numerade Educator

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Problem 8