Question 1

Typically,the government limits the quantity of a good that can be bought and sold by:

Accepted Answer

A) licensing the suppliers. 
B) setting a price floor below the equilibrium price. 
C) maintaining the equilibrium price regardless of changes in demand and supply. 
D) setting a price ceiling above the equilibrium price. 
A) licensing the suppliers. 
B) setting a price floor below the equilibrium price. 
C) maintaining the equilibrium price regardless of changes in demand and supply. 
D) setting a price ceiling above the equilibrium price.

Question 2

(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 pounds,it can impose a price:

Accepted Answer

A) floor of $20. 
B) floor of $10. 
C) ceiling of $5. 
D) floor of $15. 
A) floor of $20. 
B) floor of $10. 
C) ceiling of $5. 
D) floor of $15.

Question 3

If minimum wages are set above the equilibrium wage in the market,then the number of workers hired will be _____ the number of people who are willing to work at the prevailing wage.

Accepted Answer

A) less than 
B) greater than 
C) equal to 
D) less than,greater than,or equal to 
A) less than 
B) greater than 
C) equal to 
D) less than,greater than,or equal to

Question 4

(Figure: The Market for English Textbooks)Use Figure: The Market for English Textbooks.With a binding price floor at $90,the market outcome would be a _____ of _____ textbooks.

Accepted Answer

A) surplus;45 
B) surplus;30 
C) shortage;45 
D) shortage;30 
A) surplus;45 
B) surplus;30 
C) shortage;45 
D) shortage;30

Question 5

(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point _____,and there would be a _____ equal to the difference between points _____.

Accepted Answer

A) b;surplus;f and e 
B) b;shortage;f and e 
C) d;shortage;i and h 
D) d;surplus;e and h 
A) b;surplus;f and e 
B) b;shortage;f and e 
C) d;shortage;i and h 
D) d;surplus;e and h

Question 6

(Figure: The Market for Hybrid Cars)Use Figure: The Market for Hybrid Cars.If there were a binding price ceiling in the market for hybrid cars,one possible price would be equal to _____;consumers would demand _____;and producers would supply _____.

Accepted Answer

A) P1;Q1;Q3 
B) P2;Q2;Q2 
C) P1;Q3;Q1 
D) P3;Q3;Q1 
A) P1;Q1;Q3 
B) P2;Q2;Q2 
C) P1;Q3;Q1 
D) P3;Q3;Q1

Question 7

The quota rent is the result of a supply price that is above the demand price.

Accepted Answer

A) True 
 B)False

Question 8

In economic markets,a quota is a(n):

Accepted Answer

A) lower limit on quantity. 
B) upper limit on quantity. 
C) maximum price. 
D) minimum price. 
A) lower limit on quantity. 
B) upper limit on quantity. 
C) maximum price. 
D) minimum price.

Question 9

All else equal,if a price floor above the equilibrium is imposed on a market and the government buys the surplus,consumer surplus will _____ and producer surplus will _____.

Accepted Answer

A) fall;rise 
B) fall;fall 
C) rise;fall 
D) rise;rise 
A) fall;rise 
B) fall;fall 
C) rise;fall 
D) rise;rise

Question 10

A quota below the equilibrium quantity in the market for shrimp will cause inefficiency because mutually beneficial transactions will not occur.

Accepted Answer

A) True 
 B)False

Question 11

A binding price ceiling results in:

Accepted Answer

A) inefficiency resulting from overproduction of the good. 
B) inefficiency because transactions are held below the equilibrium quantity. 
C) a decrease in wasted resources,as consumers find such goods more easily. 
D) surpluses in the market,which eventually lead to inefficient production costs. 
A) inefficiency resulting from overproduction of the good. 
B) inefficiency because transactions are held below the equilibrium quantity. 
C) a decrease in wasted resources,as consumers find such goods more easily. 
D) surpluses in the market,which eventually lead to inefficient production costs.

Question 12

Economists in general agree that rent controls are:

Accepted Answer

A) an efficient and equitable way to help low-income families. 
B) an inefficient but sometimes effective way to help low-income families. 
C) an efficient method of dealing with the shortages caused by price ceilings. 
D) the only way to solve the problem of poverty. 
A) an efficient and equitable way to help low-income families. 
B) an inefficient but sometimes effective way to help low-income families. 
C) an efficient method of dealing with the shortages caused by price ceilings. 
D) the only way to solve the problem of poverty.

Question 13

The minimum wage,which sets a lower limit on the wages that workers can earn,is often above the equilibrium price.The minimum wage is an example of a(n):

Accepted Answer

A) price floor. 
B) price ceiling. 
C) quota. 
D) equilibrium price. 
A) price floor. 
B) price ceiling. 
C) quota. 
D) equilibrium price.

Question 14

Use the following to answer question:  
-(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million pounds of butter.

Accepted Answer

A) surplus;4.5 
B) shortage;4.5 
C) surplus;3 
D) shortage;1.5 
A) surplus;4.5 
B) shortage;4.5 
C) surplus;3 
D) shortage;1.5

Question 15

Quantity controls usually take the form of price ceilings or price floors established by the government.

Accepted Answer

A) True 
 B)False

Question 16

Which example is a quota?

Accepted Answer

A) rent controls in New York City 
B) property taxes on beachfront property in Florida 
C) limits on the number of bushels of clams that can be caught in New Jersey 
D) the maximum reimbursement that insurance will pay for a medical procedure 
A) rent controls in New York City 
B) property taxes on beachfront property in Florida 
C) limits on the number of bushels of clams that can be caught in New Jersey 
D) the maximum reimbursement that insurance will pay for a medical procedure

Question 17

Which inefficiency is NOT caused by price floors?

Accepted Answer

A) inefficiently low quality 
B) inefficient allocation of sales among sellers 
C) wasted resources 
D) illegal activity 
A) inefficiently low quality 
B) inefficient allocation of sales among sellers 
C) wasted resources 
D) illegal activity

Question 18

Use the following to answer question:  
-(Figure: Supply and Demand)Use Figure: Supply and Demand.A binding price ceiling is represented by:

Accepted Answer

A) the price P1. 
B) the price P2. 
C) the price P3. 
D) point C. 
A) the price P1. 
B) the price P2. 
C) the price P3. 
D) point C.

Question 19

Producers will sometimes lower the quality of a good when the government imposes:

Accepted Answer

A) any price control. 
B) an excise tax. 
C) a binding price floor. 
D) a binding price ceiling. 
A) any price control. 
B) an excise tax. 
C) a binding price floor. 
D) a binding price ceiling.

Question 20

When the government removes a binding price floor:

Accepted Answer

A) quantity demanded will decrease and quantity supplied will increase. 
B) quantity demanded will increase and quantity supplied will decrease. 
C) excess demand will develop. 
D) excess supply will develop. 
A) quantity demanded will decrease and quantity supplied will increase. 
B) quantity demanded will increase and quantity supplied will decrease. 
C) excess demand will develop. 
D) excess supply will develop.

Exam 5: Price Controls and Quotas: Meddling With Markets

Typically,the government limits the quantity of a good that can be bought and sold by:

(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 pounds,it can impose a price:

If minimum wages are set above the equilibrium wage in the market,then the number of workers hired will be _____ the number of people who are willing to work at the prevailing wage.

(Figure: The Market for English Textbooks)Use Figure: The Market for English Textbooks.With a binding price floor at $90,the market outcome would be a _____ of _____ textbooks.

(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point _____,and there would be a _____ equal to the difference between points _____.

(Figure: The Market for Hybrid Cars)Use Figure: The Market for Hybrid Cars.If there were a binding price ceiling in the market for hybrid cars,one possible price would be equal to _____;consumers would demand _____;and producers would supply _____.

The quota rent is the result of a supply price that is above the demand price.

In economic markets,a quota is a(n):

All else equal,if a price floor above the equilibrium is imposed on a market and the government buys the surplus,consumer surplus will _____ and producer surplus will _____.

A quota below the equilibrium quantity in the market for shrimp will cause inefficiency because mutually beneficial transactions will not occur.

A binding price ceiling results in:

Economists in general agree that rent controls are:

The minimum wage,which sets a lower limit on the wages that workers can earn,is often above the equilibrium price.The minimum wage is an example of a(n):

Use the following to answer question: -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million pounds of butter.

Quantity controls usually take the form of price ceilings or price floors established by the government.

Which example is a quota?

Which inefficiency is NOT caused by price floors?

Use the following to answer question: -(Figure: Supply and Demand)Use Figure: Supply and Demand.A binding price ceiling is represented by:

Producers will sometimes lower the quality of a good when the government imposes:

When the government removes a binding price floor:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

(Figure: The Market for English Textbooks)Use Figure: The Market for English Textbooks.With a binding price floor at $90,the market outcome would be a _ of _ textbooks.

(Figure: Price Control)Use Figure: Price Control.One effective price ceiling would be the price indicated at point ___,and there would be a _ equal to the difference between points ___.

(Figure: The Market for Hybrid Cars)Use Figure: The Market for Hybrid Cars.If there were a binding price ceiling in the market for hybrid cars,one possible price would be equal to ___;consumers would demand _;and producers would supply ___.

All else equal,if a price floor above the equilibrium is imposed on a market and the government buys the surplus,consumer surplus will _ and producer surplus will _.

Use the following to answer question: -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _ of _ million pounds of butter.