When a government imposes price controls, the result is that
A. all trades are as mutually beneficial to each party as possible.
B. the price system operates more efficiently.
C. scarcity usually disappears.
D. the rationing function of prices is not allowed to function freely.
Answer: D
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Property that is owned by everyone and therefore by no one in particular is referred to as
A) common property. B) social property. C) private property. D) commercial property.
Recall the Application about the decrease in taxes on cigarettes in several Canadian provinces in 1994 to answer the following question(s). According to this Application, after the government deceased cigarette taxes in several Canadian provinces in 1994, the decrease in the price of cigarettes in these provinces :
A. more than doubled the smoking rate. B. created no noticeable change in the smoking rate. C. increased the smoking rate by roughly 17 percent. D. was accompanied by a slight decrease in the rate of smoking.
Ethan enjoys buying books and going to the movies. He has income of $150 to spend on these two goods each month. The price of a book is $15 and the price of going to the movies is also $15. He currently consumes four books and six movies a month. If the price of a book increases to $20, then:
A. the substitution and income effects would both predict Ethan would consume less of both goods. B. the substitution effect would predict Ethan would consume more books and less movies, and the income effect would predict he would consume less of both. C. the substitution and income effects would both predict Ethan would consume more of both goods. D. the substitution effect would predict Ethan would consume less books and more movies and the income effect would predict he would consume less of both.
Refer to Figure 9.5. If the government establishes a price floor of $2.50 and farmers grow only the amount of berries that will be sold, total consumer and producer surplus will be
A) $1.50. B) $300. C) $450. D) $500. E) $600.