An effective price ceiling occurs when
A) the government sets a maximum price for a good above the equilibrium price.
B) the government sets a minimum price for a good above the equilibrium price.
C) the government sets a minimum price for a good below the equilibrium price.
D) the government sets a maximum price for a good below the equilibrium price.
D
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The owner of a garage makes large contributions to a politician who is seeking the office of state governor. If his candidate wins, he will get the contract, which now resides with a competitor, to repair State Police vehicles. This is an example of
a. moral hazard. b. externality. c. rent seeking. d. investment.
Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds. Using the midpoint method, what is the approximate value of the price elasticity of supply?
a. 0.67 b. 0.89 c. 1.00 d. 1.13
If incomes were equally distributed in the United States, each fifth of the population would receive ____ percent of the income.
A. 5 B. 10 C. 15 D. 20
The outcome of any free market is ultimately ________ because some people become very rich while others remain very poor.
A. efficient B. equitable C. inequitable D. market failure