Government Actions in Markets

2. 7 Government Actions in Markets CLICKER QUESTIONS

3. Checkpoint 7.1 Checkpoint 7.2 Checkpoint 7.3 Question 4 Question 1 Question 8 Question 2 Question 9 Question 5 Question 10 Question 6 Question 3 Question 7

4. CHECKPOINT 7.1 Question 1 A price ceiling is a government regulation that makes it illegal to charge a price _______. • below the equilibrium price • above the equilibrium price • above what most people can afford • above some specified level • that differs from the market equilibrium price

5. CHECKPOINT 7.1 Question 2 If the government imposes a rent ceiling of $400 a month in the housing market shown, it will create a • shortage of 2,000 units. • shortage of 4,000 units. • surplus of 2,000 units. • surplus of 4,000 units. • no shortage or surplus of units

6. CHECKPOINT 7.1 Question 3 Rent ceilings ________. • will help eliminate the problem of scarcity • allocate resources efficiently • ensure that housing goes to the poorer people • benefit the people who live in rent-controlled apartments • benefit landlords because they know what rent to charge their tenants

7. CHECKPOINT 7.2 Question 4 A minimum wage set above the equilibrium wage rate _____. • increases the quantity of labor services supplied, but does not change the quantity of labor demanded • decreases the quantity of labor services demanded, but does not change the quantity of labor supplied • shifts the labor supply curve rightward • shifts the labor demand curve leftward • increases the amount of unemployment

8. CHECKPOINT 7.2 Question 5 If a minimum wage is set is above the equilibrium wage rate, _______. • the quantity of labor services demanded increases • job search activity increases • the supply of labor increases • unemployment decreases because more workers accept jobs at the higher minimum wage rate • the quantity of labor supplied decreases because unemployment increases

9. CHECKPOINT 7.2 Question 6 If a minimum wage is set above the equilibrium wage rate, ________. • the outcome in the labor market is inefficient • both workers’ and firms’ surpluses shrink • resources used in job search increases • both options A and C occur • Options A, B, and C occur

10. CHECKPOINT 7.2 Question 7 If the government increases the minimum wage rate, _________. • both employment and unemployment will decrease • the deadweight loss will increase • fewer resources will be lost in job search • the labor market will be more efficient • workers’ surplus will increase

11. CHECKPOINT 7.3 Question 8 To keep the market price equal to the price support, the government must ________. • buy some of the good produced • export some of the good produced • receive a subsidy from the producers • insure that imports are readily available • be careful to always set the price support below the equilibrium price

12. CHECKPOINT 7.3 Question 9 The figure shows a price support program in an agricultural market. The amount of the subsidy necessary to keep the price at the support price is _______. • $4 a ton • $32,000 • $8,000 • $16,000 • $24,000

13. CHECKPOINT 7.3 Question 10 A price support with a subsidy ____ . • increases consumer surplus and the quantity produced is efficient • increases producer surplus, but the quantity produced is inefficient • increases both consumer surplus and producer surplus • lowers producers’ marginal cost of production and does not create a deadweight loss • does not create a surplus, so the quantity produced is efficient