Question 1

Economists perceive a college applicant's grade point average and standardized test scores (such as SAT and ACT scores) to be rationing devices.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 5-2
  
-Refer to Exhibit 5-2. If the tuition is set at $60 there will be

Accepted Answer

A)  a shortage at 10 a.m. and a surplus at 8 a.m. 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at both 10 a.m. and 8 a.m. because the price is half-way between their individual equilibria. 
D)  none of the above 
A)  a shortage at 10 a.m. and a surplus at 8 a.m. 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at both 10 a.m. and 8 a.m. because the price is half-way between their individual equilibria. 
D)  none of the above

Question 3

The lower the price of medical care in general, the higher the _________________ medical care and the _______________ specific items that make up medical care (such as x-rays). The result will be a _______________ price for the specific items that make up medical care.

Accepted Answer

A) quantity demanded of; higher the demand for; higher 
B) demand for; higher the demand for; higher 
C) quantity demanded of; lower the demand for; lower 
D) demand for; higher the quantity demanded of; higher 
A) quantity demanded of; higher the demand for; higher 
B) demand for; higher the demand for; higher 
C) quantity demanded of; lower the demand for; lower 
D) demand for; higher the quantity demanded of; higher

Question 4

If more people join carpools and travel to work together

Accepted Answer

A) the demand curve for freeway space shifts leftward. 
B) the supply curve for freeway space shifts rightward. 
C) the supply curve for freeway space shifts leftward. 
D) a and b 
E) none of the above 
A) the demand curve for freeway space shifts leftward. 
B) the supply curve for freeway space shifts rightward. 
C) the supply curve for freeway space shifts leftward. 
D) a and b 
E) none of the above

Question 5

Exhibit 5-1
  
-Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 8 a.m.?

Accepted Answer

A) P2 
B) P1 
C) 0 
D) It is not constant. 
A) P2 
B) P1 
C) 0 
D) It is not constant.

Question 6

Exhibit 5-6
  
-Refer to Exhibit 5-6. Under law 1 a renter has 30 days to vacate an apartment after being served with an eviction notice. Under law 2, the renter has 90 days to vacate after being served with an eviction notice. This graph shows that the supply of apartments is____________ under law 1 than under law 2, and thus apartment rent is _______________ under law 1 than under law 2.

Accepted Answer

A) less; lower 
B) less; higher 
C) greater; lower 
D) greater; higher 
A) less; lower 
B) less; higher 
C) greater; lower 
D) greater; higher

Question 7

Which of the following statements is false?

Accepted Answer

A) People who live in cities with good weather receive that benefit for free. 
B) People who own property in cities with good weather receive higher rents, ceteris paribus. 
C) Housing prices are higher in cities with better weather, ceteris paribus. 
D) The demand for housing is higher in cities with good weather, ceteris paribus. 
A) People who live in cities with good weather receive that benefit for free. 
B) People who own property in cities with good weather receive higher rents, ceteris paribus. 
C) Housing prices are higher in cities with better weather, ceteris paribus. 
D) The demand for housing is higher in cities with good weather, ceteris paribus.

Question 8

Exhibit 5-5
  
-Refer to Exhibit 5-5. If the airline charges a price that is between P1 and P2 for both aisle seats and middle seats, the result will be

Accepted Answer

A) a surplus of middle seats and a shortage of aisle seats. 
B) a surplus of aisle seats and a shortage of middle seats. 
C) a shortage of middle seats and the equilibrium quantity of aisle seats. 
D) a shortage of aisle seats and the equilibrium quantity of middle seats. 
A) a surplus of middle seats and a shortage of aisle seats. 
B) a surplus of aisle seats and a shortage of middle seats. 
C) a shortage of middle seats and the equilibrium quantity of aisle seats. 
D) a shortage of aisle seats and the equilibrium quantity of middle seats.

Question 9

Exhibit 5-3
  
-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete. Suppose that NCAA rules limit the amount that the college can pay this athlete, such that their payment can not exceed the cost of attending the college (currently, $8,000). What is the consumers' surplus for the college (with respect to this one athlete)?

Accepted Answer

A) area 1 
B) area 2 
C) area 1 + 2 + 3 
D) area 1 + 2 
A) area 1 
B) area 2 
C) area 1 + 2 + 3 
D) area 1 + 2

Question 10

Suppose that the government provides a subsidy for the consumption of higher education. The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.

Accepted Answer

A) lower; left 
B) higher; left 
C) higher; right 
D) left; higher 
A) lower; left 
B) higher; left 
C) higher; right 
D) left; higher

Question 11

Suppose that a subsidy is provided for the consumption of good ABC, and the subsidy is different for different units of good ABC (e.g., $10 subsidy on the first unit of good ABC and $7 on the second unit of good ABC, etc.). The demand curve with such a subsidy will lie to the ______________ of the demand curve without a subsidy, __________ parallel to the demand curve without any subsidy.

Accepted Answer

A) left; but will not be 
B) left; and will be 
C) right; and will be 
D) right; but will not be 
A) left; but will not be 
B) left; and will be 
C) right; and will be 
D) right; but will not be

Question 12

Profit can be earned by buying _____________ and selling ____________________.

Accepted Answer

A) at one price; at the same price 
B) low; high 
C) high: low 
D) none of the above 
A) at one price; at the same price 
B) low; high 
C) high: low 
D) none of the above

Question 13

The objective of speculators is to buy at one price and sell at a lower price.

Accepted Answer

A) True 
 B)False

Question 14

The NCAA rule governing the limits on the amount of a scholarship a college can offer an athlete is an effective price floor.

Accepted Answer

A) True 
 B)False

Question 15

The price of good X has a pattern such that P = $3 on Monday through Thursday of every week, and P = $2 on Fridays. If speculators begin participating in the market for good X, their actions will likely lead to a(n) ______________ in the price of good X on Monday through Thursday and a(n) _______________ in the price of good X on Friday.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 16

If there is freeway congestion at 8 a.m., we can reduce (or eliminate) the congestion by

Accepted Answer

A)  building more freeways. 
B)  raising the price to drive on the freeway at 8 a.m. 
C)  encouraging workers to carpool.. 
D)  a and b 
E)  a, b, and c 
A)  building more freeways. 
B)  raising the price to drive on the freeway at 8 a.m. 
C)  encouraging workers to carpool.. 
D)  a and b 
E)  a, b, and c

Question 17

The price of a given good is likely to be less variable with speculators than it would be without speculators.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 5-2
  
-Refer to Exhibit 5-2. If the tuition is set at $70 there will be

Accepted Answer

A)  a shortage at 10 a.m. and a surplus at 8 a.m. 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at 10 a.m. and a surplus of seats at 8 a.m. 
D)  equilibrium at 10 a.m. and a shortage of seats at 8 a.m. 
A)  a shortage at 10 a.m. and a surplus at 8 a.m. 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at 10 a.m. and a surplus of seats at 8 a.m. 
D)  equilibrium at 10 a.m. and a shortage of seats at 8 a.m.

Question 19

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores. Enrollment at this school will likely be

Accepted Answer

A) at the equilibrium level. 
B) below the equilibrium level because of the use of non-price rationing devices. 
C) above the equilibrium level because of the combination of price and the use of non-price rationing devices. 
D) none of the above 
A) at the equilibrium level. 
B) below the equilibrium level because of the use of non-price rationing devices. 
C) above the equilibrium level because of the combination of price and the use of non-price rationing devices. 
D) none of the above

Question 20

Exhibit 5-5
  
-Refer to Exhibit 5-5. If the airline charges price P2 for both aisle seats and middle seats, the result will be

Accepted Answer

A) a surplus of middle seats and the equilibrium quantity of aisle seats. 
B) a surplus of aisle seats and the equilibrium quantity of middle seats. 
C) a shortage of middle seats and the equilibrium quantity of aisle seats. 
D) a shortage of aisle seats and the equilibrium quantity of middle seats. 
A) a surplus of middle seats and the equilibrium quantity of aisle seats. 
B) a surplus of aisle seats and the equilibrium quantity of middle seats. 
C) a shortage of middle seats and the equilibrium quantity of aisle seats. 
D) a shortage of aisle seats and the equilibrium quantity of middle seats.

Exam 5: Supply Demand and Price Applications

Economists perceive a college applicant's grade point average and standardized test scores (such as SAT and ACT scores) to be rationing devices.

Exhibit 5-2 -Refer to Exhibit 5-2. If the tuition is set at $60 there will be

The lower the price of medical care in general, the higher the _________________ medical care and the _______________ specific items that make up medical care (such as x-rays). The result will be a _______________ price for the specific items that make up medical care.

If more people join carpools and travel to work together

Exhibit 5-1 -Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Which toll creates equilibrium at 8 a.m.?

Which of the following statements is false?

Exhibit 5-5 -Refer to Exhibit 5-5. If the airline charges a price that is between P1 and P2 for both aisle seats and middle seats, the result will be

Suppose that the government provides a subsidy for the consumption of higher education. The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.

Profit can be earned by buying _____________ and selling ____________________.

The objective of speculators is to buy at one price and sell at a lower price.

The NCAA rule governing the limits on the amount of a scholarship a college can offer an athlete is an effective price floor.

If there is freeway congestion at 8 a.m., we can reduce (or eliminate) the congestion by

The price of a given good is likely to be less variable with speculators than it would be without speculators.

Exhibit 5-2 -Refer to Exhibit 5-2. If the tuition is set at $70 there will be

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores. Enrollment at this school will likely be

Exhibit 5-5 -Refer to Exhibit 5-5. If the airline charges price P2 for both aisle seats and middle seats, the result will be

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

The lower the price of medical care in general, the higher the _________ medical care and the _ specific items that make up medical care (such as x-rays). The result will be a _________ price for the specific items that make up medical care.

Exhibit 5-5 -Refer to Exhibit 5-5. If the airline charges a price that is between P₁ and P₂ for both aisle seats and middle seats, the result will be

Suppose that the government provides a subsidy for the consumption of higher education. The equilibrium price of higher education will be _ with the subsidy than without because the demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy.

Profit can be earned by buying _ and selling ________.

Exhibit 5-5 -Refer to Exhibit 5-5. If the airline charges price P₂ for both aisle seats and middle seats, the result will be