modul 5 Flashcards
(24 cards)
The model of demand and supply is used to ______ what happens when the government imposes price floors or price ceilings.
explain
What is the purpose of rent control?
To stabilize rental prices
How did the government modify its involvement in agricultural markets after 1973?
The government stopped buying surpluses and instead guaranteed farmers a target price, paying the difference if the market price fell below the target price.
The Depression affected the entire economy, but it hit ______ particularly hard.
farmers
What is the effect of technological improvements in farming on the supply curve?
The supply curve shifts to the right, reducing the price of food
What is the effect of price floors on market prices?
Create surpluses
Why did farmers lobby for government programs to keep their prices from falling?
To prevent the supply curve from shifting
What is the purpose of government programs that guarantee a minimum price for agricultural products?
To ensure fair prices for farmers
What are some ways the government can use surplus agricultural products?
Surpluses can be stored, shipped to developing countries as grants-in-aid, or distributed to local school lunch programs.
What is the purpose of setting a price floor in agricultural markets?
To assist farmers
What is the effect of a price ceiling on apartment rents?
It creates a shortage of apartments
What was the federal government’s response to the Depression’s impact on farmers?
Implement price floors
What is the effect of a price ceiling set below the equilibrium price?
It creates a shortage of apartments
What are the effects of farm support programs?
Boost and stabilize farm incomes
Consumers pay more for food
Government spends heavily to finance the programs
What happens when the government imposes a price floor?
The quantity supplied decreases
What restrictions did farmers have to comply with in order to receive government payments?
Farmers had to remove acres from production and comply with certain conservation provisions.
Rent control is an example of a __.
price ceiling
Rent controls and other price ceilings often lead to various ‘backdoor’ payments to apartment owners, such as large security deposits, payments for things renters may not want, so-called ‘key’ payments, or ______.
bribes
A price floor that is set ______ the equilibrium price creates a surplus.
above
What is the effect of a price floor set above the equilibrium price in the market for wheat?
A surplus of wheat
What is a price floor?
A price floor is a minimum allowable price set above the equilibrium price.
What are the consequences of rent control?
Reduced tenant mobility
What is an example of a price ceiling?
Rent controls
What happens to equilibrium quantity and price in agricultural markets when there are shifts in supply and demand?
They change depending on the direction and magnitude of the shifts.