Question 1

Use the following table to answer the questions that follow.
  
-What would be the equilibrium price in the market for corn?

Accepted Answer

A) $2.00 
B) $5.00 
C) $4.00 
D) $3.50 
E) $4.50 
A) $2.00 
B) $5.00 
C) $4.00 
D) $3.50 
E) $4.50 D

Question 2

Do all buyers benefit from a binding price ceiling?

Accepted Answer

A) Yes.A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market. 
B) No.A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market. 
C) No.A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products. 
D) No.A binding price ceiling benefits only some buyers because,although the price is initially lower,it eventually increases to the equilibrium price. 
E) No.A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium. 
A) Yes.A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market. 
B) No.A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market. 
C) No.A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products. 
D) No.A binding price ceiling benefits only some buyers because,although the price is initially lower,it eventually increases to the equilibrium price. 
E) No.A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium. B

Question 3

____________ is a real-life example of a price floor.

Accepted Answer

A) A minimum wage law 
B) Rent control 
C) A price gouging law 
D) A black market price 
E) A ration price 
A) A minimum wage law 
B) Rent control 
C) A price gouging law 
D) A black market price 
E) A ration price A

Question 4

Use the following information to answer the questions that follow.Market for a new hardcover book:
Demand: QS1U1B1dS1U1B0 = 325 - 8 P
Supply: QS1U1B1sS1U1B0 = -60 + 3 P
-What would be the quantity demanded if a price ceiling is set at $20?

Accepted Answer

A) 90 
B) 45 
C) 265 
D) 165 
E) 305 
A) 90 
B) 45 
C) 265 
D) 165 
E) 305

Question 5

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

Accepted Answer

A) minimum wage law. 
B) fair wage law. 
C) price ceiling. 
D) black market price. 
E) ration price. 
A) minimum wage law. 
B) fair wage law. 
C) price ceiling. 
D) black market price. 
E) ration price.

Question 6

Use the following information to answer the questions that follow.Market for a new hardcover book:
Demand: QS1U1B1dS1U1B0 = 325 - 8 P
Supply: QS1U1B1sS1U1B0 = -60 + 3 P
-What would be the quantity demanded if a price ceiling is set at $50?

Accepted Answer

A) 90 
B) 35 
C) 265 
D) 165 
E) 75 
A) 90 
B) 35 
C) 265 
D) 165 
E) 75

Question 7

Use the following information to answer the questions that follow.
Market for used cars:
Demand: QS1U1B1dS1U1B0 = 154,000 - 86 P
Supply: QS1U1B1sS1U1B0 = -100 + 14 P
-What would be the quantity supplied if a price floor is set at $100?

Accepted Answer

A) 100 
B) 154,100 
C) 1,541 
D) 21,474 
E) 1,300 
A) 100 
B) 154,100 
C) 1,541 
D) 21,474 
E) 1,300

Question 8

Use the following table to answer the questions that follow.
  
-Why is raising the minimum wage generally ineffective?

Accepted Answer

A) Most employers purchase labor on the black market,where the binding price floor is not present. 
B) The minimum wage is an amount suggested by the government,and employers are under no obligation to pay their employees the suggested basic wage. 
C) The minimum wage is usually set below the prevailing equilibrium wage and is frequently nonbinding. 
D) Employees are often unconcerned with their wages and care more about the benefits that come with the job. 
E) Most employees who hold low-wage jobs work in the black market,where the binding price floor doesn't exist. 
A) Most employers purchase labor on the black market,where the binding price floor is not present. 
B) The minimum wage is an amount suggested by the government,and employers are under no obligation to pay their employees the suggested basic wage. 
C) The minimum wage is usually set below the prevailing equilibrium wage and is frequently nonbinding. 
D) Employees are often unconcerned with their wages and care more about the benefits that come with the job. 
E) Most employees who hold low-wage jobs work in the black market,where the binding price floor doesn't exist.

Question 9

An example of a binding price ceiling is:

Accepted Answer

A) a minimum wage law that is set above the equilibrium price. 
B) rent control that is set above the equilibrium price. 
C) a black market that sets the price below the equilibrium price. 
D) a minimum wage law that is set below the equilibrium price. 
E) rent control that is set below the equilibrium price. 
A) a minimum wage law that is set above the equilibrium price. 
B) rent control that is set above the equilibrium price. 
C) a black market that sets the price below the equilibrium price. 
D) a minimum wage law that is set below the equilibrium price. 
E) rent control that is set below the equilibrium price.

Question 10

Which is a correct statement about a rent control law?

Accepted Answer

A) A rent control law is a price floor law that makes apartments cheaper to rent but discourages property owners from renting out apartments. 
B) A rent control law encourages property owners to convert offices and condos into apartments. 
C) A rent control law reduces housing shortages. 
D) A rent control law encourages landlords to rent out apartments. 
E) A rent control law is a price ceiling law that makes apartments cheaper to rent but discourages property owners from renting out apartments. 
A) A rent control law is a price floor law that makes apartments cheaper to rent but discourages property owners from renting out apartments. 
B) A rent control law encourages property owners to convert offices and condos into apartments. 
C) A rent control law reduces housing shortages. 
D) A rent control law encourages landlords to rent out apartments. 
E) A rent control law is a price ceiling law that makes apartments cheaper to rent but discourages property owners from renting out apartments.

Question 11

A nonbinding price floor has the following consequences:

Accepted Answer

A) There will be downward pressure on prices until quantity demanded equals quantity supplied. 
B) There will be upward pressure on prices until quantity demanded equals quantity supplied. 
C) There are no consequences to a nonbinding price floor. 
D) The quantity demanded will always exceed the quantity supplied. 
E) The quantity demanded will always be smaller than the quantity supplied. 
A) There will be downward pressure on prices until quantity demanded equals quantity supplied. 
B) There will be upward pressure on prices until quantity demanded equals quantity supplied. 
C) There are no consequences to a nonbinding price floor. 
D) The quantity demanded will always exceed the quantity supplied. 
E) The quantity demanded will always be smaller than the quantity supplied.

Question 12

Use the following information to answer the questions that follow.
Market for used cars:
Demand: QS1U1B1dS1U1B0 = 154,000 - 86 P
Supply: QS1U1B1sS1U1B0 = -100 + 14 P
-What would be the equilibrium price for used cars?

Accepted Answer

A) $100 
B) $154,100 
C) $21,474 
D) $1,541 
E) $72 
A) $100 
B) $154,100 
C) $21,474 
D) $1,541 
E) $72

Question 13

If rent control is established at $1,750,what would be the amount of disequilibrium in the apartment market?

Accepted Answer

A) There would be a shortage of 23,500 apartments. 
B) There would be a surplus of 23,500 apartments that is reduced,over time,as individuals rent apartments in the illegal black market. 
C) There would be neither a shortage nor a surplus. 
D) There would be a surplus of 23,500 apartments that is eliminated through individuals renting apartments in the illegal black market. 
E) There would be a surplus of 23,500 apartments that increases as houses and condominiums are converted into apartments. 
A) There would be a shortage of 23,500 apartments. 
B) There would be a surplus of 23,500 apartments that is reduced,over time,as individuals rent apartments in the illegal black market. 
C) There would be neither a shortage nor a surplus. 
D) There would be a surplus of 23,500 apartments that is eliminated through individuals renting apartments in the illegal black market. 
E) There would be a surplus of 23,500 apartments that increases as houses and condominiums are converted into apartments.

Question 14

Refer to the accompanying figure to answer the questions that follow.
  
-The market is currently at market equilibrium.If a binding price ceiling of P1 is imposed,by how much would the quantity demanded change?

Accepted Answer

A) It would increase by 12,000 units. 
B) It would decrease by 30,500 units. 
C) It would decrease by 12,000 units. 
D) It would increase by 30,500 units. 
E) It would increase by 30,000 units. 
A) It would increase by 12,000 units. 
B) It would decrease by 30,500 units. 
C) It would decrease by 12,000 units. 
D) It would increase by 30,500 units. 
E) It would increase by 30,000 units.

Question 15

If a price ceiling or price floor existed where you lived,would you be willing to purchase products on the black market? What would you identify as a consequence to engaging in transactions on the black market over the short run and the long run?

Accepted Answer

Students' answers will vary.If a student

Question 16

If you were a politician,why would you find it difficult to remove a binding price floor?

Accepted Answer

A) because it greatly benefits firms,and they would spend a lot of money to lobby against the law's repeal 
B) because it greatly benefits all consumers,who are also voters 
C) because it greatly benefits society as a whole,with all consumers able to buy as much as firms produce 
D) because it is not difficult to remove: the legal market price or quantity are not affected 
E) because it greatly benefits the government,which receives additional tax revenue as a result 
A) because it greatly benefits firms,and they would spend a lot of money to lobby against the law's repeal 
B) because it greatly benefits all consumers,who are also voters 
C) because it greatly benefits society as a whole,with all consumers able to buy as much as firms produce 
D) because it is not difficult to remove: the legal market price or quantity are not affected 
E) because it greatly benefits the government,which receives additional tax revenue as a result

Question 17

Why do shortages develop under a binding price ceiling?

Accepted Answer

A) It encourages sellers to produce more of the product. 
B) It encourages buyers to purchase less of the product. 
C) It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market. 
D) It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market. 
E) It encourages sellers to increase the quality of the product they sell,which,in turn,increases the quantity demanded. 
A) It encourages sellers to produce more of the product. 
B) It encourages buyers to purchase less of the product. 
C) It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market. 
D) It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market. 
E) It encourages sellers to increase the quality of the product they sell,which,in turn,increases the quantity demanded.

Question 18

What will happen in a market where a binding price floor is removed?

Accepted Answer

A) The products sold will become scarcer. 
B) There will be upward pressure on the prices. 
C) There will be downward pressure on the prices. 
D) The price or quantity of the product sold in the legal market will not change. 
E) There will be increased pressure to buy and sell the good on the black market. 
A) The products sold will become scarcer. 
B) There will be upward pressure on the prices. 
C) There will be downward pressure on the prices. 
D) The price or quantity of the product sold in the legal market will not change. 
E) There will be increased pressure to buy and sell the good on the black market.

Question 19

Which of the following is an accurate statement about the consequence of a binding price floor?

Accepted Answer

A) Binding price floors do not allow sellers to receive a higher price if they sell the product in the legal market. 
B) Binding price floors encourage the formation of a black market. 
C) Binding price floors discourage the formation of a black market. 
D) Binding price floors create a shortage of the product. 
E) Binding price floors cause consumers to want to purchase more of the product in the legal market. 
A) Binding price floors do not allow sellers to receive a higher price if they sell the product in the legal market. 
B) Binding price floors encourage the formation of a black market. 
C) Binding price floors discourage the formation of a black market. 
D) Binding price floors create a shortage of the product. 
E) Binding price floors cause consumers to want to purchase more of the product in the legal market.

Question 20

What is the incentive to create a black market when a binding price ceiling exists?

Accepted Answer

A) A black market emerges because sellers have a surplus that they need to sell. 
B) A black market emerges because sellers want a market where they can sell lower-quality products. 
C) A black market emerges because sellers want a market where they can sell higher-quality products at higher prices. 
D) A black market does not emerge because sellers are content to sell at the lower price. 
E) A black market emerges because buyers who have a low opportunity cost are seeking out the product. 
A) A black market emerges because sellers have a surplus that they need to sell. 
B) A black market emerges because sellers want a market where they can sell lower-quality products. 
C) A black market emerges because sellers want a market where they can sell higher-quality products at higher prices. 
D) A black market does not emerge because sellers are content to sell at the lower price. 
E) A black market emerges because buyers who have a low opportunity cost are seeking out the product.

Use the following table to answer the questions that follow. -What would be the equilibrium price in the market for corn?

Do all buyers benefit from a binding price ceiling?

____________ is a real-life example of a price floor.

Use the following information to answer the questions that follow.Market for a new hardcover book: Demand: Q_d = 325 - 8 P Supply: Q_s = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $20?

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

Use the following information to answer the questions that follow.Market for a new hardcover book: Demand: Q_d = 325 - 8 P Supply: Q_s = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $50?

Use the following information to answer the questions that follow. Market for used cars: Demand: Q_d = 154,000 - 86 P Supply: Q_s = -100 + 14 P -What would be the quantity supplied if a price floor is set at $100?

Use the following table to answer the questions that follow. -Why is raising the minimum wage generally ineffective?

An example of a binding price ceiling is:

Which is a correct statement about a rent control law?

A nonbinding price floor has the following consequences:

Use the following information to answer the questions that follow. Market for used cars: Demand: Q_d = 154,000 - 86 P Supply: Q_s = -100 + 14 P -What would be the equilibrium price for used cars?

If rent control is established at $1,750,what would be the amount of disequilibrium in the apartment market?

Refer to the accompanying figure to answer the questions that follow. -The market is currently at market equilibrium.If a binding price ceiling of P₁ is imposed,by how much would the quantity demanded change?

If a price ceiling or price floor existed where you lived,would you be willing to purchase products on the black market? What would you identify as a consequence to engaging in transactions on the black market over the short run and the long run?

If you were a politician,why would you find it difficult to remove a binding price floor?

Why do shortages develop under a binding price ceiling?

What will happen in a market where a binding price floor is removed?

Which of the following is an accurate statement about the consequence of a binding price floor?

What is the incentive to create a black market when a binding price ceiling exists?

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

Exam 5: Price Controls

Use the following table to answer the questions that follow. -What would be the equilibrium price in the market for corn?

Do all buyers benefit from a binding price ceiling?

____________ is a real-life example of a price floor.

Use the following information to answer the questions that follow.Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $20?

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

Use the following information to answer the questions that follow.Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $50?

Use the following information to answer the questions that follow. Market for used cars: Demand: Qd = 154,000 - 86 P Supply: Qs = -100 + 14 P -What would be the quantity supplied if a price floor is set at $100?

Use the following table to answer the questions that follow. -Why is raising the minimum wage generally ineffective?

An example of a binding price ceiling is:

Which is a correct statement about a rent control law?

A nonbinding price floor has the following consequences:

Use the following information to answer the questions that follow. Market for used cars: Demand: Qd = 154,000 - 86 P Supply: Qs = -100 + 14 P -What would be the equilibrium price for used cars?

If rent control is established at $1,750,what would be the amount of disequilibrium in the apartment market?

Refer to the accompanying figure to answer the questions that follow. -The market is currently at market equilibrium.If a binding price ceiling of P1 is imposed,by how much would the quantity demanded change?

If a price ceiling or price floor existed where you lived,would you be willing to purchase products on the black market? What would you identify as a consequence to engaging in transactions on the black market over the short run and the long run?

If you were a politician,why would you find it difficult to remove a binding price floor?

Why do shortages develop under a binding price ceiling?

What will happen in a market where a binding price floor is removed?

Which of the following is an accurate statement about the consequence of a binding price floor?

What is the incentive to create a black market when a binding price ceiling exists?

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Elasticity

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

Use the following information to answer the questions that follow.Market for a new hardcover book: Demand: Q_d = 325 - 8 P Supply: Q_s = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $20?

Use the following information to answer the questions that follow.Market for a new hardcover book: Demand: Q_d = 325 - 8 P Supply: Q_s = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $50?

Use the following information to answer the questions that follow. Market for used cars: Demand: Q_d = 154,000 - 86 P Supply: Q_s = -100 + 14 P -What would be the quantity supplied if a price floor is set at $100?

Use the following information to answer the questions that follow. Market for used cars: Demand: Q_d = 154,000 - 86 P Supply: Q_s = -100 + 14 P -What would be the equilibrium price for used cars?

Refer to the accompanying figure to answer the questions that follow. -The market is currently at market equilibrium.If a binding price ceiling of P₁ is imposed,by how much would the quantity demanded change?