Question 1

If the minimum wage is set above the equilibrium wage, then

Accepted Answer

A) more people will work than at the equilibrium wage. 
B) the same number of people will work as at the equilibrium wage. 
C) fewer people will want to work than at the equilibrium wage. 
D) there will be fewer labor hours purchased by employers than at the equilibrium wage. 
A) more people will work than at the equilibrium wage. 
B) the same number of people will work as at the equilibrium wage. 
C) fewer people will want to work than at the equilibrium wage. 
D) there will be fewer labor hours purchased by employers than at the equilibrium wage.

Question 2

Exhibit 4-2  
Exhibit 4-2 represents the orange juice market. The horizontal line at $2 shows a price ceiling imposed by the government. Which of the following statements is true at this price?

Accepted Answer

A) At the price ceiling the surplus equals 400 units. 
B) At the price ceiling the shortage equals 400 units. 
C) At the price ceiling the surplus equals 300 units. 
D) At the price ceiling the shortage equals 200 units. 
A) At the price ceiling the surplus equals 400 units. 
B) At the price ceiling the shortage equals 400 units. 
C) At the price ceiling the surplus equals 300 units. 
D) At the price ceiling the shortage equals 200 units.

Question 3

Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline)was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce)on the West. In the spring of 1974, price controls were abolished.
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 4

Price ceilings and price floors

Accepted Answer

A) shift demand and supply curves and therefore have no effect upon the rationing function of prices. 
B) interfere with the rationing function of prices. 
C) make the rationing function of free markets more efficient. 
D) cause surpluses and shortages, respectively. 
A) shift demand and supply curves and therefore have no effect upon the rationing function of prices. 
B) interfere with the rationing function of prices. 
C) make the rationing function of free markets more efficient. 
D) cause surpluses and shortages, respectively.

Question 5

If the absolute price of a computer is $600 and the relative price of a dining room table is 3 computers, it follows that the absolute price of a dining room table is

Accepted Answer

A) $180. 
B) $200. 
C) $3,000. 
D) $30,000. 
E) $1,800. 
A) $180. 
B) $200. 
C) $3,000. 
D) $30,000. 
E) $1,800.

Question 6

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market.  Give a hypothetical numerical example to help support your answer.

Accepted Answer

In order for a price ceiling to have an

Question 7

If goods are not rationed according to price, if follows that

Accepted Answer

A) they won't get rationed at all. 
B) some non-price rationing device will be used to ration the goods. 
C) first-come-first-served will necessarily be the rationing device used in the market. 
D) there will be surpluses in the market. 
A) they won't get rationed at all. 
B) some non-price rationing device will be used to ration the goods. 
C) first-come-first-served will necessarily be the rationing device used in the market. 
D) there will be surpluses in the market.

Question 8

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 producers' surplus at PF?

Accepted Answer

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

Question 9

Exhibit 4-2  
Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. How many fewer units would be exchanged at the price ceiling compared to the number that would be exchanged at the equilibrium price?

Accepted Answer

A) 200 units. 
B) 100 units. 
C) 400 units. 
D) 800 units. 
A) 200 units. 
B) 100 units. 
C) 400 units. 
D) 800 units.

Question 10

In order for a price ceiling to have an impact on a market it must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A price ceiling set below the equilibrium price will

Accepted Answer

A) clear the market for the good. 
B) result in a shortage of the good. 
C) result in a surplus of the good. 
D) induce new firms to enter the industry. 
A) clear the market for the good. 
B) result in a shortage of the good. 
C) result in a surplus of the good. 
D) induce new firms to enter the industry.

Question 13

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

Question 14

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 15

Exhibit 4-4  
Refer to Exhibit 4-4. Which of the following statements is false ?

Accepted Answer

A) Graph (1): A price ceiling set at P2 would not have an impact on the market. 
B) Graph (2): As supply increases, equilibrium price remains constant. 
C) Graph (3): As demand increases, equilibrium quantity remains constant. 
D) Graph (4): As supply increases, equilibrium quantity increases. 
A) Graph (1): A price ceiling set at P2 would not have an impact on the market. 
B) Graph (2): As supply increases, equilibrium price remains constant. 
C) Graph (3): As demand increases, equilibrium quantity remains constant. 
D) Graph (4): As supply increases, equilibrium quantity increases.

Question 16

If the price of good X is $100 and the price of good Y is $25, it follows that the relative price of one unit of good X is _____________ unit(s)of good Y.

Accepted Answer

A) 1.00 
B) 4.00 
C) 0.25 
D) 1.33 
E) 0.75 
A) 1.00 
B) 4.00 
C) 0.25 
D) 1.33 
E) 0.75

Question 17

In the market for a given product, when a price floor is set above the equilibrium price the result will be

Accepted Answer

A) more exchanges made in the market. 
B) an increase in the supply of the product. 
C) a decrease in the demand for the product. 
D) a deadweight loss. 
A) more exchanges made in the market. 
B) an increase in the supply of the product. 
C) a decrease in the demand for the product. 
D) a deadweight loss.

Question 18

Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline)was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce)on the West. In the spring of 1974, price controls were abolished.
Refer to Situation 4-1. An economist would have most likely predicted that once price controls were abolished in the spring of 1974,

Accepted Answer

A) the price of gasoline would decline sharply. 
B) the surplus of gasoline would go away. 
C) the shortage of gasoline would go away. 
D) the demand for gasoline would decrease. 
A) the price of gasoline would decline sharply. 
B) the surplus of gasoline would go away. 
C) the shortage of gasoline would go away. 
D) the demand for gasoline would decrease.

Question 19

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

Accepted Answer

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

Question 20

Which of the following would not result from a price ceiling (set below the equilibrium price)?

Accepted Answer

A) a shortage 
B) fewer exchanges 
C) an increase in supply 
D) nonprice rationing devices 
A) a shortage 
B) fewer exchanges 
C) an increase in supply 
D) nonprice rationing devices

Exam 4: Prices: Free, Controlled, and Relative

If the minimum wage is set above the equilibrium wage, then

Exhibit 4-2 Exhibit 4-2 represents the orange juice market. The horizontal line at $2 shows a price ceiling imposed by the government. Which of the following statements is true at this price?

Price ceilings and price floors

If the absolute price of a computer is $600 and the relative price of a dining room table is 3 computers, it follows that the absolute price of a dining room table is

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market. Give a hypothetical numerical example to help support your answer.

If goods are not rationed according to price, if follows that

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 producers' surplus at PF?

Exhibit 4-2 Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. How many fewer units would be exchanged at the price ceiling compared to the number that would be exchanged at the equilibrium price?

In order for a price ceiling to have an impact on a market it must be set above the equilibrium price.

A price ceiling is a government-mandated

A price ceiling set below the equilibrium price 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 4-10 ​ ​ 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 4-4 Refer to Exhibit 4-4. Which of the following statements is false ?

If the price of good X is $100 and the price of good Y is $25, it follows that the relative price of one unit of good X is _____________ unit(s)of good Y.

In the market for a given product, when a price floor is set above the equilibrium price the result will be

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

Which of the following would not result from a price ceiling (set below the equilibrium price)?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Supply, Demand, and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility 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, Union, 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

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 producers' 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 is the size of the consumers' surplus at P_F?

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