Question 1

A binding rent-control price ceiling does NOT result in:

Accepted Answer

A) inefficiently low transaction costs. 
B) wasted resources of consumers caused by time spent searching for the good. 
C) inefficient allocation of the good to consumers. 
D) inefficiently high quality of the good being sold. 
A) inefficiently low transaction costs. 
B) wasted resources of consumers caused by time spent searching for the good. 
C) inefficient allocation of the good to consumers. 
D) inefficiently high quality of the good being sold.

Question 2

A price ceiling below the equilibrium price is likely to result in a persistent _____,a transfer of surplus from _____,and _____ deadweight loss.

Accepted Answer

A) surplus;producers to some consumers;some 
B) shortage;producers to some consumers;some 
C) shortage;some consumers to producers;no 
D) surplus;some consumers to producers;some 
A) surplus;producers to some consumers;some 
B) shortage;producers to some consumers;some 
C) shortage;some consumers to producers;no 
D) surplus;some consumers to producers;some

Question 3

An increase in producer surplus would most likely occur if:

Accepted Answer

A) an effective price floor was imposed. 
B) an effective price ceiling was imposed. 
C) the market price of the good decreased. 
D) no changes occurred in the market. 
A) an effective price floor was imposed. 
B) an effective price ceiling was imposed. 
C) the market price of the good decreased. 
D) no changes occurred in the market.

Question 4

Use the following to answer question:  
-(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent0,renters would be willing to pay a price at least as high as:

Accepted Answer

A) Rent4 for Q0 units. 
B) Rent4 for Q1 units. 
C) Rent3 for Q1 units. 
D) No one would be willing to pay a higher actual price than Rent0. 
A) Rent4 for Q0 units. 
B) Rent4 for Q1 units. 
C) Rent3 for Q1 units. 
D) No one would be willing to pay a higher actual price than Rent0.

Question 5

Use the following to answer question:  
-(Table: Market for Apartments)Use Table: Market for Apartments.If a price ceiling of $900 is imposed on this market,the result will be an inefficiency in the form of a _____ million apartments.

Accepted Answer

A) surplus of 0.6 
B) shortage of 0.6 
C) surplus of 0.2 
D) shortage of 0.2 
A) surplus of 0.6 
B) shortage of 0.6 
C) surplus of 0.2 
D) shortage of 0.2

Question 6

Price ceilings will impose costs on society because they:

Accepted Answer

A) will eliminate long waiting lines. 
B) may result in black markets,where prices are lower than the market-determined price would be. 
C) lead to a smaller quantity offered on the market. 
D) help businesses instead of consumers. 
A) will eliminate long waiting lines. 
B) may result in black markets,where prices are lower than the market-determined price would be. 
C) lead to a smaller quantity offered on the market. 
D) help businesses instead of consumers.

Question 7

(Table: Market for Butter)Use Figure: Market for Butter.If the government imposes a price floor of $0.90 per pound of butter,the quantity of butter actually purchased will be _____ million pounds.

Accepted Answer

A) 10.5 
B) 9.0 
C) 1.5 
D) 10.0 
A) 10.5 
B) 9.0 
C) 1.5 
D) 10.0

Question 8

An effective minimum wage ultimately means that:

Accepted Answer

A) some unskilled workers have a difficult time finding a job. 
B) employers must encourage workers to apply for positions. 
C) employers will have difficulty finding enough workers for their positions. 
D) workers are generally guaranteed employment. 
A) some unskilled workers have a difficult time finding a job. 
B) employers must encourage workers to apply for positions. 
C) employers will have difficulty finding enough workers for their positions. 
D) workers are generally guaranteed employment.

Question 9

Suppose that the average cost of a doctor visit is $100.If the government imposes a price ceiling of $50 on the cost of a doctor visit,there will be:

Accepted Answer

A) an excess supply of doctor visits. 
B) an excess demand for doctor visits. 
C) an increase in the equilibrium number of doctor visits. 
D) no change in the number of doctor visits. 
A) an excess supply of doctor visits. 
B) an excess demand for doctor visits. 
C) an increase in the equilibrium number of doctor visits. 
D) no change in the number of doctor visits.

Question 10

The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:

Accepted Answer

A) demand to decrease. 
B) supply to increase. 
C) a shortage of the good. 
D) an increase in the quality of the good. 
A) demand to decrease. 
B) supply to increase. 
C) a shortage of the good. 
D) an increase in the quality of the good.

Question 11

Which example would be considered a price floor?

Accepted Answer

A) a rent-controlled apartment 
B) a maximum legal price that could be charged for gasoline during a time of war 
C) the minimum wage 
D) a government decree that capped the price of bottled water in the aftermath of a devastating hurricane 
A) a rent-controlled apartment 
B) a maximum legal price that could be charged for gasoline during a time of war 
C) the minimum wage 
D) a government decree that capped the price of bottled water in the aftermath of a devastating hurricane

Question 12

In a(n)_____ market,goods or services are bought and sold illegally.

Accepted Answer

A) black 
B) uncontrolled 
C) unregulated 
D) unproductive 
A) black 
B) uncontrolled 
C) unregulated 
D) unproductive

Question 13

(Figure: Quantity Controls)Use Figure: Quantity Controls.If the government decides to restrict the quantity sold to 100,which statement is FALSE?

Accepted Answer

A) Total surplus will fall by areas C and E. 
B) The market is not at the free-market equilibrium. 
C) Consumer surplus is maximized. 
D) Some mutually beneficial transactions have been eliminated. 
A) Total surplus will fall by areas C and E. 
B) The market is not at the free-market equilibrium. 
C) Consumer surplus is maximized. 
D) Some mutually beneficial transactions have been eliminated.

Question 14

Suppose the NFL wants to give the "common fan" the opportunity to attend the Super Bowl,so it sets Super Bowl prices "low"-let's say they set ticket prices for a regular seat at Super Bowl LI to cost just $400.People who have tickets,however,can turn around and sell them online for $1,500 or more.If there are no transaction costs for fans with tickets to sell them,the true cost to a fan of attending Super Bowl LI is:

Accepted Answer

A) at most $400. 
B) at least $1,500. 
C) the monetary price paid to obtain the ticket. 
D) $1,100 less than the opportunity cost of a ticket. 
A) at most $400. 
B) at least $1,500. 
C) the monetary price paid to obtain the ticket. 
D) $1,100 less than the opportunity cost of a ticket.

Question 15

(Figure: The Market for Clams)Use Figure: The Market for Clams.The government imposes a quota limiting sales of clams to 1,000 pounds.According to the figure,the quota rent per pound in this case is:

Accepted Answer

A) $7.50. 
B) $5.00. 
C) $2.50. 
D) The quota rent cannot be determined from the information provided. 
A) $7.50. 
B) $5.00. 
C) $2.50. 
D) The quota rent cannot be determined from the information provided.

Question 16

A quota is the minimum amount of some good that can be bought and sold in the market.

Accepted Answer

A) True 
 B)False

Question 17

When transatlantic airfares were set artificially high by an international treaty,airlines offered customers an inefficiently high quality of service.

Accepted Answer

A) True 
 B)False

Question 18

Which statement(s)is/are TRUE? I.Quantity controls set below the market equilibrium quantity drive a wedge between the demand price and the supply price of the good.
II.The difference between the demand price and the supply price at the quota limit is consumer surplus.
III.Quantity controls have no undesirable side effects.

Accepted Answer

A) I only 
B) II only 
C) II and III 
D) I,II,and III 
A) I only 
B) II only 
C) II and III 
D) I,II,and III

Question 19

The most likely reason that the government implements a price _____ is because it feels the price is too high for _____.

Accepted Answer

A) ceiling;consumers 
B) floor;consumers 
C) ceiling;producers 
D) floor;producers 
A) ceiling;consumers 
B) floor;consumers 
C) ceiling;producers 
D) floor;producers

Question 20

Deadweight loss is the lost gains associated with transactions that do not occur because of market intervention,such as a quota.

Accepted Answer

A) True 
 B)False

A binding rent-control price ceiling does NOT result in:

A price ceiling below the equilibrium price is likely to result in a persistent ___,a transfer of surplus from _,and ___ deadweight loss.

An increase in producer surplus would most likely occur if:

Use the following to answer question: -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₀,renters would be willing to pay a price at least as high as:

Use the following to answer question: -(Table: Market for Apartments)Use Table: Market for Apartments.If a price ceiling of $900 is imposed on this market,the result will be an inefficiency in the form of a _____ million apartments.

Price ceilings will impose costs on society because they:

(Table: Market for Butter)Use Figure: Market for Butter.If the government imposes a price floor of $0.90 per pound of butter,the quantity of butter actually purchased will be _____ million pounds.

An effective minimum wage ultimately means that:

Suppose that the average cost of a doctor visit is $100.If the government imposes a price ceiling of $50 on the cost of a doctor visit,there will be:

The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:

Which example would be considered a price floor?

In a(n)_____ market,goods or services are bought and sold illegally.

(Figure: Quantity Controls)Use Figure: Quantity Controls.If the government decides to restrict the quantity sold to 100,which statement is FALSE?

(Figure: The Market for Clams)Use Figure: The Market for Clams.The government imposes a quota limiting sales of clams to 1,000 pounds.According to the figure,the quota rent per pound in this case is:

A quota is the minimum amount of some good that can be bought and sold in the market.

When transatlantic airfares were set artificially high by an international treaty,airlines offered customers an inefficiently high quality of service.

The most likely reason that the government implements a price _ is because it feels the price is too high for _.

Deadweight loss is the lost gains associated with transactions that do not occur because of market intervention,such as a quota.

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

Exam 5: Price Controls and Quotas: Meddling With Markets

A binding rent-control price ceiling does NOT result in:

A price ceiling below the equilibrium price is likely to result in a persistent _____,a transfer of surplus from _____,and _____ deadweight loss.

An increase in producer surplus would most likely occur if:

Use the following to answer question: -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent0,renters would be willing to pay a price at least as high as:

Use the following to answer question: -(Table: Market for Apartments)Use Table: Market for Apartments.If a price ceiling of $900 is imposed on this market,the result will be an inefficiency in the form of a _____ million apartments.

Price ceilings will impose costs on society because they:

(Table: Market for Butter)Use Figure: Market for Butter.If the government imposes a price floor of $0.90 per pound of butter,the quantity of butter actually purchased will be _____ million pounds.

An effective minimum wage ultimately means that:

Suppose that the average cost of a doctor visit is $100.If the government imposes a price ceiling of $50 on the cost of a doctor visit,there will be:

The government imposes a price ceiling below the equilibrium price.The price ceiling will cause:

Which example would be considered a price floor?

In a(n)_____ market,goods or services are bought and sold illegally.

(Figure: Quantity Controls)Use Figure: Quantity Controls.If the government decides to restrict the quantity sold to 100,which statement is FALSE?

(Figure: The Market for Clams)Use Figure: The Market for Clams.The government imposes a quota limiting sales of clams to 1,000 pounds.According to the figure,the quota rent per pound in this case is:

A quota is the minimum amount of some good that can be bought and sold in the market.

When transatlantic airfares were set artificially high by an international treaty,airlines offered customers an inefficiently high quality of service.

The most likely reason that the government implements a price _____ is because it feels the price is too high for _____.

Deadweight loss is the lost gains associated with transactions that do not occur because of market intervention,such as a quota.

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

A price ceiling below the equilibrium price is likely to result in a persistent ___,a transfer of surplus from _,and ___ deadweight loss.

Use the following to answer question: -(Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are set at Rent₀,renters would be willing to pay a price at least as high as:

The most likely reason that the government implements a price _ is because it feels the price is too high for _.