Question 1

Refer to the accompanying figure. At what price would there be the LEAST pressure to form a black market?

Accepted Answer

A)  $5 
B)  $8 
C)  $13 
D)  $15 
E)  $20 
A)  $5 
B)  $8 
C)  $13 
D)  $15 
E)  $20 B

Question 2

Use the following table to answer the next questions. $$\begin{array} { l l l } 
\hline \text { Wage Rate } & \text { Quantity of Labor Demanded } & \text { Quantity of Labor Supplied } \
\hline \$ 5.00 & 175,550,000 & 120,000,000 \
\$ 5.50 & 162,000,000 & 136,485,000 \
\$ 6.00 & 153,300,020 & 153,300,020 \
\$ 6.50 & 148,600,579 & 155,250,000 \
\$ 7.00 & 142,050,000 & 157,132,360 \
\$ 7.50 & 139,630,000 & 159,800,000 \
\$ 8.00 & 135,000,000 & 161,000,785 \
\hline
\end{array}$$
-How would an economist explain a teenager's continued unemployment where there exists a minimum wage?

Accepted Answer

A)  The minimum wage law made it such that the quantity of labor willing to work at that wage was less than the quantity of labor demanded at that wage. 
B)  The minimum wage law made it illegal to hire teenagers because they likely would have been unable to work a minimum number of hours. 
C)  The minimum wage law made it such that the quantity of labor willing to work at that wage was greater than the quantity of labor demanded at that wage. 
D)  The minimum wage law made it such that the market had reached equilibrium. 
E)  The minimum wage law was nonbinding. 
A)  The minimum wage law made it such that the quantity of labor willing to work at that wage was less than the quantity of labor demanded at that wage. 
B)  The minimum wage law made it illegal to hire teenagers because they likely would have been unable to work a minimum number of hours. 
C)  The minimum wage law made it such that the quantity of labor willing to work at that wage was greater than the quantity of labor demanded at that wage. 
D)  The minimum wage law made it such that the market had reached equilibrium. 
E)  The minimum wage law was nonbinding. C

Question 3

If a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it, the store is selling the good in an)

Accepted Answer

A)  black market for a market price that is higher. 
B)  black market for a market price that is lower. 
C)  effort to eliminate a surplus of the good. 
D)  legal market for a market price that is higher. 
E)  legal market for a market price that is lower. 
A)  black market for a market price that is higher. 
B)  black market for a market price that is lower. 
C)  effort to eliminate a surplus of the good. 
D)  legal market for a market price that is higher. 
E)  legal market for a market price that is lower. A

Question 4

Discuss why any society would want a binding price floor law on a commodity such as corn. Who would benefit? Who would suffer? If it is the case that more suffering is caused by the presence of a price floor law, why does it remain in effect?

Accepted Answer

A society might interpret a binding pric

Question 5

Setting a price ceiling below the equilibrium price can result in

Accepted Answer

A)  a surplus, where the quantity demanded exceeds the quantity supplied. 
B)  a shortage, where the quantity demanded exceeds the quantity supplied. 
C)  a surplus, where the quantity supplied exceeds the quantity demanded. 
D)  a shortage, where the quantity supplied exceeds the quantity demanded. 
E)  no impact on the quantity demanded or on the quantity supplied. 
A)  a surplus, where the quantity demanded exceeds the quantity supplied. 
B)  a shortage, where the quantity demanded exceeds the quantity supplied. 
C)  a surplus, where the quantity supplied exceeds the quantity demanded. 
D)  a shortage, where the quantity supplied exceeds the quantity demanded. 
E)  no impact on the quantity demanded or on the quantity supplied.

Question 6

The usual stated political goal of rent control is

Accepted Answer

A)  to conduct social engineering via economic rules. 
B)  to pander to real estate landlords by assuring them a low occupancy rate. 
C)  to pander to the low income voters by assuring them enough living space. 
D)  to assist the low income at a cost to society, in convenient, affordable housing. 
E)  prices that allow rationing to the highest bidder. 
A)  to conduct social engineering via economic rules. 
B)  to pander to real estate landlords by assuring them a low occupancy rate. 
C)  to pander to the low income voters by assuring them enough living space. 
D)  to assist the low income at a cost to society, in convenient, affordable housing. 
E)  prices that allow rationing to the highest bidder.

Question 7

A binding price ceiling will have which of 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 binding price ceiling. 
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 binding price ceiling. 
D)  The quantity demanded will always exceed the quantity supplied. 
E)  The quantity demanded will always be smaller than the quantity supplied.

Question 8

If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is selling the good in an)

Accepted Answer

A)  black market for a market price that is higher. 
B)  black market for a market price that is lower. 
C)  effort to eliminate a surplus of the good. 
D)  legal market for a market price that is higher. 
E)  legal market for a market price that is lower. 
A)  black market for a market price that is higher. 
B)  black market for a market price that is lower. 
C)  effort to eliminate a surplus of the good. 
D)  legal market for a market price that is higher. 
E)  legal market for a market price that is lower.

Question 9

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

Accepted Answer

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

Question 10

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 products 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 products they sell, which in turn increases the quantity demanded.

Question 11

Jamie, an economics student, was just named Miss Florida, based in part on her answer to the question of why price gouging laws should be relaxed in that state. Jamie won because she gave which of the following answers?

Accepted Answer

A)  They prevent customers who are willing to pay higher prices for needed products from doing so during a time of disaster. 
B)  They cause consumers to consume more of certain products during a time of disaster. 
C)  They cause producers to overproduce products during a time of disaster. 
D)  They act as a binding price floor in a time of disaster. 
E)  They cause a surplus in the product during a time of disaster. 
A)  They prevent customers who are willing to pay higher prices for needed products from doing so during a time of disaster. 
B)  They cause consumers to consume more of certain products during a time of disaster. 
C)  They cause producers to overproduce products during a time of disaster. 
D)  They act as a binding price floor in a time of disaster. 
E)  They cause a surplus in the product during a time of disaster.

Question 12

When market participants are allowed through their interactions to find the price, there will be equilibrium where the quantity supplied by buyers equals the quantity supplied by sellers. If this is the case, why does the government intervene in certain markets by imposing a price floor? Why does the government intervene in certain markets by imposing a price ceiling? Which market participant the buyer or the seller) will lobby the government to secure passage of a binding price floor? Which one will lobby for a binding price ceiling?

Accepted Answer

The government will generally intervene

Question 13

Why are binding price ceiling laws passed?

Accepted Answer

A)  They make goods more expensive and profitable) for firms. 
B)  They encourage sellers to produce more of a good. 
C)  They encourage producers to sell higher-quality products. 
D)  They permit customers to obtain higher-quality products. 
E)  They make a good less expensive for those customers who are able to purchase the good in the legal market. 
A)  They make goods more expensive and profitable) for firms. 
B)  They encourage sellers to produce more of a good. 
C)  They encourage producers to sell higher-quality products. 
D)  They permit customers to obtain higher-quality products. 
E)  They make a good less expensive for those customers who are able to purchase the good in the legal market.

Question 14

Refer to the accompanying figure to answer the next  questions.
  
-At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium?

Accepted Answer

A)  The quantity supplied would increase by 32,000 units. 
B)  The quantity supplied would decrease by 18,000 units. 
C)  The quantity supplied would increase by 30,500 units. 
D)  The quantity supplied would decrease by 30,500 units. 
E)  The quantity supplied would decrease by 32,000 units. 
A)  The quantity supplied would increase by 32,000 units. 
B)  The quantity supplied would decrease by 18,000 units. 
C)  The quantity supplied would increase by 30,500 units. 
D)  The quantity supplied would decrease by 30,500 units. 
E)  The quantity supplied would decrease by 32,000 units.

Question 15

Use the following information to answer the next questions. Market for used cars:
Demand: QS1U1B1dS1U1B0 = 154,000 - 86P
Supply: QS1U1B1sS1U1B0 = -100 + 14P
-What would be the quantity demanded if a price ceiling is set at $1,000?

Accepted Answer

A)  500 
B)  54,100 
C)  68,000 
D)  13,900 
E)  21,474 
A)  500 
B)  54,100 
C)  68,000 
D)  13,900 
E)  21,474

Question 16

If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn?

Accepted Answer

A)  There would be neither a shortage nor a surplus. 
B)  There would be a surplus of 61,000. 
C)  There would be a shortage of 61,000. 
D)  There would be a shortage of 186,000. 
E)  There would be a shortage of 125,000. 
A)  There would be neither a shortage nor a surplus. 
B)  There would be a surplus of 61,000. 
C)  There would be a shortage of 61,000. 
D)  There would be a shortage of 186,000. 
E)  There would be a shortage of 125,000.

Question 17

Why would a politician find it difficult to remove a binding price ceiling?

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 government, which receives additional tax revenue as a result 
C)  because it greatly benefits all consumers, and they are also voters 
D)  because it greatly benefits some consumers who are also voters 
E)  because it greatly benefits society as a whole, with all consumers able to buy as much as firms produce 
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 government, which receives additional tax revenue as a result 
C)  because it greatly benefits all consumers, and they are also voters 
D)  because it greatly benefits some consumers who are also voters 
E)  because it greatly benefits society as a whole, with all consumers able to buy as much as firms produce

Question 18

Price gouging laws will usually result in the product in _______the distressed market.

Accepted Answer

A)  more supply of 
B)  more local business start-ups to supply 
C)  government setting up an agency to regulate supply of 
D)  more Craigslist postings for 
E)  more demand than supply of 
A)  more supply of 
B)  more local business start-ups to supply 
C)  government setting up an agency to regulate supply of 
D)  more Craigslist postings for 
E)  more demand than supply of

Question 19

Price gouging laws

Accepted Answer

A)  are necessary and proper to prevent predatory pricing on victims of disasters. 
B)  keep distressed markets in equilibrium by maintaining "normal" prices. 
C)  restrict entrepreneurial behavior and consumer choice. 
D)  are enacted to encourage government-sponsored relief efforts. 
E)  have little effect on distressed markets and thus are irrelevant. 
A)  are necessary and proper to prevent predatory pricing on victims of disasters. 
B)  keep distressed markets in equilibrium by maintaining "normal" prices. 
C)  restrict entrepreneurial behavior and consumer choice. 
D)  are enacted to encourage government-sponsored relief efforts. 
E)  have little effect on distressed markets and thus are irrelevant.

Question 20

In some countries, a binding price ceiling is placed on prescription medicines. What would someone expect the prescription medicine market to be like in these countries?

Accepted Answer

A)  The legal maximum price would mean that all consumers are able to receive the medicines they need at prices they can afford. 
B)  The legal maximum price would mean that pharmaceutical companies face an incentive to sell more prescription medicines in that country. 
C)  The legal maximum price would mean that it is unlikely that an illegal and dangerous black market for prescription drugs will form in that country. 
D)  The legal maximum price would mean that pharmaceutical companies face an incentive to develop new prescription medicines. 
E)  The legal maximum price would mean that not all consumers will have access to prescription medicines. 
A)  The legal maximum price would mean that all consumers are able to receive the medicines they need at prices they can afford. 
B)  The legal maximum price would mean that pharmaceutical companies face an incentive to sell more prescription medicines in that country. 
C)  The legal maximum price would mean that it is unlikely that an illegal and dangerous black market for prescription drugs will form in that country. 
D)  The legal maximum price would mean that pharmaceutical companies face an incentive to develop new prescription medicines. 
E)  The legal maximum price would mean that not all consumers will have access to prescription medicines.

Refer to the accompanying figure. At what price would there be the LEAST pressure to form a black market?

If a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it, the store is selling the good in an)

Discuss why any society would want a binding price floor law on a commodity such as corn. Who would benefit? Who would suffer? If it is the case that more suffering is caused by the presence of a price floor law, why does it remain in effect?

Setting a price ceiling below the equilibrium price can result in

The usual stated political goal of rent control is

A binding price ceiling will have which of the following consequences?

If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is selling the good in an)

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

Why do shortages develop under a binding price ceiling?

Jamie, an economics student, was just named Miss Florida, based in part on her answer to the question of why price gouging laws should be relaxed in that state. Jamie won because she gave which of the following answers?

Why are binding price ceiling laws passed?

Refer to the accompanying figure to answer the next questions. -At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium?

Use the following information to answer the next questions. Market for used cars: Demand: Q_d = 154,000 - 86P Supply: Q_s = -100 + 14P -What would be the quantity demanded if a price ceiling is set at $1,000?

If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn?

Why would a politician find it difficult to remove a binding price ceiling?

Price gouging laws will usually result in the product in _______the distressed market.

Price gouging laws

In some countries, a binding price ceiling is placed on prescription medicines. What would someone expect the prescription medicine market to be like in these countries?

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy Learning Objectives

International Trade

International Finance

Filters

Exam 5: Price Controls

Refer to the accompanying figure. At what price would there be the LEAST pressure to form a black market?

If a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it, the store is selling the good in an)

Discuss why any society would want a binding price floor law on a commodity such as corn. Who would benefit? Who would suffer? If it is the case that more suffering is caused by the presence of a price floor law, why does it remain in effect?

Setting a price ceiling below the equilibrium price can result in

The usual stated political goal of rent control is

A binding price ceiling will have which of the following consequences?

If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is selling the good in an)

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

Why do shortages develop under a binding price ceiling?

Jamie, an economics student, was just named Miss Florida, based in part on her answer to the question of why price gouging laws should be relaxed in that state. Jamie won because she gave which of the following answers?

Why are binding price ceiling laws passed?

Refer to the accompanying figure to answer the next questions. -At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium?

Use the following information to answer the next questions. Market for used cars: Demand: Qd = 154,000 - 86P Supply: Qs = -100 + 14P -What would be the quantity demanded if a price ceiling is set at $1,000?

If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn?

Why would a politician find it difficult to remove a binding price ceiling?

Price gouging laws will usually result in the product in _______the distressed market.

Price gouging laws

In some countries, a binding price ceiling is placed on prescription medicines. What would someone expect the prescription medicine market to be like in these countries?

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy Learning Objectives

International Trade

International Finance

Filters

Use the following information to answer the next questions. Market for used cars: Demand: Q_d = 154,000 - 86P Supply: Q_s = -100 + 14P -What would be the quantity demanded if a price ceiling is set at $1,000?