An effective price ceiling on a good or service ________________________.

increases the price of the good or service
creates a shortage of the good or service
occurs only in the market for rental housing
benefits everyone who plans to buy the good or service

Sherry wants to rent a house. Although the rent is below what she is willing to pay, she cannot find a house to rent. After spending hours searching and money on telephone calls and petrol, Sherry eventually finds a house. Sherry has just experienced the effects of ___________________.

a market working efficiently
inelastic demand
a rent floor with a black market
a rent ceiling

Suppose the government imposes a price ceiling on staplers. When the quantity demanded of staplers exceeds the quantity supplied, ____________________________.

the demand for staplers will decrease
the supply of staplers will increase
the price of a stapler will fall
there is incentive for students to undertake search activity

If the government of Easy Life imposes a rent ceiling but does not enforce it, then the actual quantity of housing rented will be close to the unregulated equilibrium quantity because ___________________.

Easy Life has lots of high-rise apartment buildings
the supply of rental housing is perfectly elastic
people will undertake search activity
a black market will exist

A minimum wage _______________________.

changes the demand for labour
is an effective way of increasing employment
is a price ceiling in the labour market
is effective when it is set above the equilibrium wage rate

Hair shampoo has a _______ and _______ pay most of the tax levied on hair shampoo.

low elasticity of supply; buyers
high elasticity of demand; buyers
high elasticity of supply; sellers
low elasticity of demand; buyers

Which of the following outcomes is not a result of a tax on beer?

Demand decreases, the market becomes more efficient, and the price rises.
Supply decreases, a deadweight loss is created, and the price rises.
Demand does not change, the price rises, and consumer surplus decreases.
The market becomes less efficient and the government collects the tax revenue.

The more elastic is the demand for a good, the _____________ likely will the government tax that good. But if the good is taxed, the ______________ is the amount of the tax paid by the buyer of the good.

more; smaller
less; larger
more; larger
less; smaller

An increase in the supply of wheat will ___________ the price and ___________ farm revenue because the demand for wheat is __________.

increase, increase, inelastic
decrease, decrease, elastic
increase, increase, elastic
decrease, decrease, inelastic

To stop cheeper agricultural imports from flooding the market, the European Union sets a tariff equal to __________.

the difference between the target price and the world price
the difference between the target price and the price at which European farmers are efficient
the difference between the world price and the equilibrium price in European markets
the target price