CLEP Microeconomics chapter practice4 questions

09 Price Ceilings, Price Floors, and Rationing

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

The equilibrium rent for an apartment is $1,400. Which rent ceiling is binding?

A ceiling binds only when it is below equilibrium. A ceiling at or above $1,400 does not prevent the market-clearing rent.
Show answer and explanation

E. $1,100

A ceiling binds only when it is below equilibrium. A ceiling at or above $1,400 does not prevent the market-clearing rent.

Question 2

Question 2 of 4

A binding minimum price in an agricultural market will normally create

A price floor above equilibrium encourages production while discouraging purchases, leaving excess quantity supplied.
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C. excess supply at the legal price

A price floor above equilibrium encourages production while discouraging purchases, leaving excess quantity supplied.

Question 3

Question 3 of 4

A binding price ceiling creates a shortage. Which allocation mechanism may replace price rationing?

When legal price cannot clear the market, time, connections, seller choice, or quality changes may ration the scarce units.
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B. Waiting in line or favoritism by sellers

When legal price cannot clear the market, time, connections, seller choice, or quality changes may ration the scarce units.

Question 4

Question 4 of 4

A market equilibrium is 100 units at 12. A ceiling of 8 results in quantity demanded of 130 and quantity supplied of 70. How many units are actually sold at most?

Trades require both a buyer and a seller. With only 70 units supplied, no more than 70 units can be sold.
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A. 70

Trades require both a buyer and a seller. With only 70 units supplied, no more than 70 units can be sold.

Quiz complete