Price Ceiling Ce Mc By Topics

HKCEE ECONOMICS |

3.1 Price ceiling |

P.1

1. 1992/II/27

The above diagram shows the price and quantity of Good X. The price increases from Pc to Pe after the price ceiling is cancelled. As a result, the total expenditure on Good X will
A. increase
C. remain unchanged

B. decrease
D. either increase or decrease, depending on its price elasticity of demand

2. 1994/II/10

The above diagram shows the supply of and the demand for the tickets of a concert.
If the tickets are sold at P2 in stead of P1,
(1) a black market may occur.
(2) the sales revenue will be smaller.
(3) the quantity transacted will be greater.
(4) the sales revenue may increase or decrease, depending on the price elasticity of demand.
A. (1) and (2) only
B. (2) and (4) only
C. (2) and (3) only
D. (3) and (4) only
3. 1996/II/8
Shortage occurs when
A. a price floor below the equilibrium price is imposed.
C. the supply is reduced.

B. an effective price ceiling is imposed.
D. the demand increase sharply.

4. 1996/II/9
Suppose initially the price of a certain good is fixed below the market equilibrium. Relaxing the price control will lead to
(1) an increase in revenue.
(2) a decrease in demand.
(3) an increase in revenue only if the demand for this good is inelastic.
(4) an increase in the quantity supplied.
A. (1) and (2) only
B. (1) and (4) only
C. (2) and (3) only

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D.

(3) and (4) only