Question

1. What do a price ceiling and a price floor have in common?

A. They increase the price of a good or service

B. They decrease the price of a good or service

C. If they are effective, they both decrease the quantity bought and sold of a good or service

D. If they are effective, they both are considered by everyone to be better than the equilibrium

E. They have nothing to do with the government

2. Consider the following market for flash drives.

Price Quantity supplied Quantity demanded

$50 2,250 750

$45 2,000 1,000

$40 1,750 1,250

$35 1,500 1,500

$30 1,250 1,750

$25 1,000 2,000

$20 750 2,250

$15 500 2,500

$10 250 2,750

$5 0 3,000

$0 0 3,250

Relative to the equilibrium, who is made better off by a price ceiling that equals $2?

A. Buyers

B. Sellers

C. Both buyers and sellers

D. Neither

E. None of the above

3. Use the table from the previous problem. If a price floor is then set at $50, how many flash drives will be bought and sold?

A. 2,250

B. 1,500

C. 1,250

D. 750

E. 0

4. What is the effect of a tax?

A. The price buyers pay falls

B. The price sellers receive rises

C. The quantity stays the same

D. Consumers of this good are made happier by the tax

E. None of the above

5. Consider the market for marijuana in Orange County. Suppose at a price of $100, the quantity demanded is 1827.525 pounds. At a price of $200, the quantity demanded is 1172.475 pounds. What is the PED?

A. -1.54

B. -1

C. -0.84

D. -0.65

E. Not enough information

Answer 1

1. Option D is correct answer

explanation:- price floor and ceiling imposed by government to balance the supply and demand of products to control the price. It is legal price which is different from equilibrium price.