Question 1

A price floor (set above the equilibrium price) on rice will

Accepted Answer

A) force otherwise profitable farmers out of business. 
B) result in a shortage of rice. 
C) result in a surplus of rice. 
D) clear the market for rice. 
E) both a and b 
A) force otherwise profitable farmers out of business. 
B) result in a shortage of rice. 
C) result in a surplus of rice. 
D) clear the market for rice. 
E) both a and b C

Question 2

Exhibit 4-8
  
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the consumers' surplus at PF?

Accepted Answer

A) area 5 
B) area 6 
C) area 1 + 2 + 4 
D) area 1 
A) area 5 
B) area 6 
C) area 1 + 2 + 4 
D) area 1 D

Question 3

Exhibit 4-8
  
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What has happened to the producers' surplus as a result of the imposition of the price floor?

Accepted Answer

A) Producers' surplus has risen by (area 2 + 3) 
B) Producers' surplus has fallen by (area 4 + 5) 
C) Producers' surplus has changed by (area 3 - area 5) 
D) Producers' surplus has changed by (area 2 - area 5) 
A) Producers' surplus has risen by (area 2 + 3) 
B) Producers' surplus has fallen by (area 4 + 5) 
C) Producers' surplus has changed by (area 3 - area 5) 
D) Producers' surplus has changed by (area 2 - area 5) D

Question 4

Exhibit 4-10
​
​
   Unskilled Labor Market
​
​
-Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. How many fewer unskilled workers would be employed at the minimum wage, compared to the number that would be employed at the equilibrium wage?

Accepted Answer

A) 2,000 
B) 3,000 
C) 4,000 
D) 5,000 
E) 7,000 
A) 2,000 
B) 3,000 
C) 4,000 
D) 5,000 
E) 7,000

Question 5

Exhibit 4-8
  
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the total surplus at PF?

Accepted Answer

A) area 1 + 2 + 3 
B) area 1 + 2 + 3 + 4 
C) area 1 + 2 + 3 + 4 + 5 
D) area 1 + 2 + 3 + 4 + 5 + 6 
A) area 1 + 2 + 3 
B) area 1 + 2 + 3 + 4 
C) area 1 + 2 + 3 + 4 + 5 
D) area 1 + 2 + 3 + 4 + 5 + 6

Question 6

At the minimum wage (set above the equilibrium wage),

Accepted Answer

A) all individuals who end up working are paid less than if they were paid the equilibrium wage. 
B) none of the workers will lose there jobs or find themselves working fewer hours. 
C) none of the individuals who end up working are paid more than if they were paid the equilibrium wage. 
D) there will be fewer people working (or fewer labor hours demanded) than at the equilibrium wage. 
E) none of the above 
A) all individuals who end up working are paid less than if they were paid the equilibrium wage. 
B) none of the workers will lose there jobs or find themselves working fewer hours. 
C) none of the individuals who end up working are paid more than if they were paid the equilibrium wage. 
D) there will be fewer people working (or fewer labor hours demanded) than at the equilibrium wage. 
E) none of the above

Question 7

Suppose you live in New York City and the government has imposed price ceilings on apartment rental rates. You want to rent an apartment from Smith, who says that unless you buy the furniture in the apartment for $4,000, he cannot rent the apartment to you. The condition of buying the furniture could be considered

Accepted Answer

A) a price ceiling. 
B) a price floor. 
C) a tie-in sale. 
D) to be something no renter would agree to. 
E) c and d 
A) a price ceiling. 
B) a price floor. 
C) a tie-in sale. 
D) to be something no renter would agree to. 
E) c and d

Question 8

Exhibit 4-1
  
-Refer to Exhibit 4-1. The number of units bought and sold at the price ceiling is

Accepted Answer

A) 75. 
B) 125. 
C) 175. 
D) 100. 
A) 75. 
B) 125. 
C) 175. 
D) 100.

Question 9

Exhibit 4-8
  
-Refer to Exhibit 4-8. If the wheat market is in competitive equilibrium the total surplus will equal

Accepted Answer

A) area 1 + 2 + 3 + 4 + 5 
B) area 1 + 2 + 3 
C) area 2 + 3 + 4 + 5 
D) area 4 + 5 
A) area 1 + 2 + 3 + 4 + 5 
B) area 1 + 2 + 3 
C) area 2 + 3 + 4 + 5 
D) area 4 + 5

Question 10

Exhibit 4-7
  
-Refer to Exhibit 4-7. The number of unskilled workers who want to work at the minimum wage is

Accepted Answer

A) N3. 
B) N1. 
C) N2. 
D) N2 - N1. 
A) N3. 
B) N1. 
C) N2. 
D) N2 - N1.

Question 11

Suppose the government imposes a price ceiling above the equilibrium price of a given good. Which of the following is the most likely result?

Accepted Answer

A) Some other rationing device will emerge to allocate the good among buyers. 
B) Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling. 
C) No change will occur in the market. 
D) Brute force will be used to allocate the good among buyers. 
E) a, b, and d 
A) Some other rationing device will emerge to allocate the good among buyers. 
B) Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling. 
C) No change will occur in the market. 
D) Brute force will be used to allocate the good among buyers. 
E) a, b, and d

Question 12

Exhibit 4-1
  
-Refer to Exhibit 4-1. Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

Accepted Answer

A) $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others. 
B) they think it is only fair for sellers to receive higher prices. 
C) they want to increase their chances of buying a good for which there is a shortage. 
D) it is customary to pay more than the price ceiling. 
A) $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others. 
B) they think it is only fair for sellers to receive higher prices. 
C) they want to increase their chances of buying a good for which there is a shortage. 
D) it is customary to pay more than the price ceiling.

Question 13

A price ceiling is a government-mandated

Accepted Answer

A) minimum price below which legal trades cannot be made. 
B) maximum price above which legal trades cannot be made. 
C) minimum price above which legal trades cannot be made. 
D) maximum price below which legal trades cannot be made. 
A) minimum price below which legal trades cannot be made. 
B) maximum price above which legal trades cannot be made. 
C) minimum price above which legal trades cannot be made. 
D) maximum price below which legal trades cannot be made.

Question 14

When the price of a good falls, the price is transmitting information indicating that the good has become relatively

Accepted Answer

A) scarcer. 
B) less scarce. 
C) more plentiful in demand. 
D) b and c 
A) scarcer. 
B) less scarce. 
C) more plentiful in demand. 
D) b and c

Question 15

Exhibit 4-9
  
-Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $11. How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?

Accepted Answer

A) 50 
B) 30 
C) 40 
D) 70 
A) 50 
B) 30 
C) 40 
D) 70

Question 16

Exhibit 4-6
  
-Refer to Exhibit 4-6. At a wage of $7, there will be a __________ of unskilled workers equal to __________ thousand workers.

Accepted Answer

A) shortage; 10 
B) surplus; 20 
C) surplus; 10 
D) shortage; 20 
E) surplus; 15 
A) shortage; 10 
B) surplus; 20 
C) surplus; 10 
D) shortage; 20 
E) surplus; 15

Question 17

-Refer to Situation 4-1. If no price controls had been in place, the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been

Accepted Answer

A) an increase in both price and quantity. 
B) an increase in price and a decrease in quantity. 
C) a decrease in price and an increase in quantity. 
D) a decrease in both price and quantity. 
A) an increase in both price and quantity. 
B) an increase in price and a decrease in quantity. 
C) a decrease in price and an increase in quantity. 
D) a decrease in both price and quantity.

Question 18

Which of the following is false?

Accepted Answer

A) When the U.S.government imposed price ceilings on gasoline, the result was a surplus of gasoline. 
B) When the U.S.government imposed price ceilings on gasoline, the result was a shortage of gasoline. 
C) If a price ceiling is imposed below the equilibrium price in a given market, the result is a shortage in that market. 
D) First-come-first-served is a commonly used rationing device. 
A) When the U.S.government imposed price ceilings on gasoline, the result was a surplus of gasoline. 
B) When the U.S.government imposed price ceilings on gasoline, the result was a shortage of gasoline. 
C) If a price ceiling is imposed below the equilibrium price in a given market, the result is a shortage in that market. 
D) First-come-first-served is a commonly used rationing device.

Question 19

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor, then the

Accepted Answer

A) minimum wage will create a surplus of unskilled labor. 
B) minimum wage will create a shortage of unskilled labor. 
C) minimum wage will not impact the unskilled labor market. 
D) unskilled labor market will change, but we cannot be certain how. 
A) minimum wage will create a surplus of unskilled labor. 
B) minimum wage will create a shortage of unskilled labor. 
C) minimum wage will not impact the unskilled labor market. 
D) unskilled labor market will change, but we cannot be certain how.

Question 20

Price serves as a

Accepted Answer

A) rationing device. 
B) transmitter of information. 
C) means of determining who gets what of the available limited resources and goods. 
D) a and b 
E) all of the above 
A) rationing device. 
B) transmitter of information. 
C) means of determining who gets what of the available limited resources and goods. 
D) a and b 
E) all of the above

Exam 4: Prices Free Controlled and Relative

A price floor (set above the equilibrium price) on rice will

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the consumers' surplus at PF?

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What has happened to the producers' surplus as a result of the imposition of the price floor?

Exhibit 4-10 ​ ​ Unskilled Labor Market ​ ​ -Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. How many fewer unskilled workers would be employed at the minimum wage, compared to the number that would be employed at the equilibrium wage?

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the total surplus at PF?

At the minimum wage (set above the equilibrium wage),

Exhibit 4-1 -Refer to Exhibit 4-1. The number of units bought and sold at the price ceiling is

Exhibit 4-8 -Refer to Exhibit 4-8. If the wheat market is in competitive equilibrium the total surplus will equal

Exhibit 4-7 -Refer to Exhibit 4-7. The number of unskilled workers who want to work at the minimum wage is

Suppose the government imposes a price ceiling above the equilibrium price of a given good. Which of the following is the most likely result?

Exhibit 4-1 -Refer to Exhibit 4-1. Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

A price ceiling is a government-mandated

When the price of a good falls, the price is transmitting information indicating that the good has become relatively

Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $11. How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?

Exhibit 4-6 -Refer to Exhibit 4-6. At a wage of $7, there will be a __________ of unskilled workers equal to __________ thousand workers.

-Refer to Situation 4-1. If no price controls had been in place, the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been

Which of the following is false?

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor, then the

Price serves as a

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Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What is the size of the consumers' surplus at P_F?

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What has happened to the producers' surplus as a result of the imposition of the price floor?

Exhibit 4-10 Unskilled Labor Market -Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. How many fewer unskilled workers would be employed at the minimum wage, compared to the number that would be employed at the equilibrium wage?

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What is the size of the total surplus at P_F?

Exhibit 4-6 -Refer to Exhibit 4-6. At a wage of $7, there will be a of unskilled workers equal to thousand workers.