econ

Producers will be stuck with unwanted heating oil.oProducers will be tempted to offer illegal discounts on heating oil.> The lack of demand for heating oil, due to the higher price, pressures sellers to find alternative ways of selling the good to make up for lost profits. These alternatives usually come in the form of illegal deals and discounts, in order for sellers to avoid being stuck with unsold heating oil.26. Place the following events in the order they will occur over the short run once a binding price control is imposed in the labor market.oA binding minimum wage is implemented.oThe cost of hiring workers rises.oThe quantity of labor demanded decreases.oUnemployment sets in.27. The government’s attempt to stimulateadditional demand for agricultural products leads to complex and unintended consequences. The government will often purchase surplus agricultural production and sell it at a lowercost to developing countries rather than letting crops go to waste. People in these countries can then purchase the excess output from developed nations rather than goods from local farmers.28. Suppose the government enacts a price ceiling on ice cream. Identify the various potential decisions made by ice cream producers to compensate for the price ceiling and maintain profits.Correct Answer(s)oDiscontinuing the production of fancier varietiesoReducing the size of each carton of ice creamoLowering the quality of ice cream by using cheaper productsIncorrect Answer(s)
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oHiring additional workers at a lower wage in order to meet demand29. The story of American sugar production illustrates the real-world consequences of price controls. Various price supports have been implemented over the years to maintain high production of domestic sugar. This has led U.S-produced sugar to become two to three times more expensivethan the world price. The result is overproduction and waste as U.S. farmers are incentivizedto produce more sugar thanis needed in regions that are not suited for growing the crop.30. For what purpose are price controls generally enacted in the United States?To alleviate public anxiety regarding perceived burdens on society. The message of price control laws is that goods and services required for a normally happy life should be within the reach of people with limited means.31. If price does not have the ability to adjust when demand increases, there will be a shortageof the product. Devastated communities are negativelyaffected by price gouging legislation, as they must depend solely on thegenerosityof others and sluggish government action. Entrepreneurialactivity is nolonger a form of mitigating poor conditions.32. Match each type of price ceiling to its appropriate descriptions.
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