Question 1

A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to

Accepted Answer

A) clear the market for unskilled workers. 
B) increase the number of unskilled workers employed. 
C) increase the number of firms in those industries where the law is effective. 
D) reduce the number of unskilled workers employed and\or reduce the number of hours worked by unskilled workers. 
A) clear the market for unskilled workers. 
B) increase the number of unskilled workers employed. 
C) increase the number of firms in those industries where the law is effective. 
D) reduce the number of unskilled workers employed and\or reduce the number of hours worked by unskilled workers.

Question 2

Exhibit 4-1  
Refer to Exhibit 4-1. At the equilibrium price, ________ units of the good would be exchanged.  With a price ceiling, _______ units of the good would be exchanged.

Accepted Answer

A) 125; 75 
B) 75; 125 
C) 175; 125 
D) 125; 175 
A) 125; 75 
B) 75; 125 
C) 175; 125 
D) 125; 175

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. An economist would have most likely predicted that the oil embargo imposed in 1974 would result in a

Accepted Answer

A) leftward shift in the supply (curve)of gasoline. 
B) rightward shift in the supply (curve)of gasoline. 
C) leftward shift in the demand (curve)for gasoline. 
D) rightward shift in the demand (curve)for gasoline. 
A) leftward shift in the supply (curve)of gasoline. 
B) rightward shift in the supply (curve)of gasoline. 
C) leftward shift in the demand (curve)for gasoline. 
D) rightward shift in the demand (curve)for gasoline.

Question 4

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. Because price controls were in effect at the time the embargo occurred, an economist would have most likely predicted that

Accepted Answer

A) the number of dollars one would need to pay at the pump (legally)for a full tank of gasoline would increase sharply. 
B) the number of dollars one would need to pay at the pump (legally)for a full tank of gasoline would decline sharply. 
C) nonprice-rationing devices, such as long waiting lines and black markets, would appear. 
D) a surplus of gasoline would result. 
A) the number of dollars one would need to pay at the pump (legally)for a full tank of gasoline would increase sharply. 
B) the number of dollars one would need to pay at the pump (legally)for a full tank of gasoline would decline sharply. 
C) nonprice-rationing devices, such as long waiting lines and black markets, would appear. 
D) a surplus of gasoline would result.

Question 5

Exhibit 4-3  
Refer to Exhibit 4-3. If price P1 is a price ceiling, then

Accepted Answer

A) the quantity exchanged is Q3. 
B) there is a surplus in this market. 
C) it is the highest price that can legally be charged in this market. 
D) it is the lowest price that can legally be charged in this market. 
A) the quantity exchanged is Q3. 
B) there is a surplus in this market. 
C) it is the highest price that can legally be charged in this market. 
D) it is the lowest price that can legally be charged in this market.

Question 6

Exhibit 4-3  
Refer to Exhibit 4-3. If price P3 is a price ceiling, then

Accepted Answer

A) the price ceiling does not have an effect on the market for good X. 
B) the price at which exchange takes place is P3. 
C) there is a shortage in the market for good X. 
A) the price ceiling does not have an effect on the market for good X. 
B) the price at which exchange takes place is P3. 
C) there is a shortage in the market for good X.

Question 7

Exhibit 4-9   Refer to Exhibit 4-9.  Suppose that the government imposes a price ceiling at a price of $13.  _________ units would be exchanged at the equilibrium price and ____________ units would be exchanged with the price ceiling in effect.

Accepted Answer

A) 150; 220 
B) 150; 150 
C) 110; 180 
D) 150; 90 
A) 150; 220 
B) 150; 150 
C) 110; 180 
D) 150; 90

Question 8

The need for a rationing device results from scarcity.

Accepted Answer

A) True 
 B)False

Question 9

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 10

A shortage of unskilled labor will occur if the minimum wage is set below the equilibrium wage in the unskilled labor market.

Accepted Answer

A) True 
 B)False

Question 11

There are two goods in the economy: tea and rice. If the relative price of tea has increased it could be a result of

Accepted Answer

A) a decrease in the absolute price of rice. 
B) a decrease in the absolute price of tea. 
C) an increase in the absolute price of rice. 
D) a simultaneous increase in the absolute price of rice and decrease in the absolute price of tea. 
A) a decrease in the absolute price of rice. 
B) a decrease in the absolute price of tea. 
C) an increase in the absolute price of rice. 
D) a simultaneous increase in the absolute price of rice and decrease in the absolute price of tea.

Question 12

What condition is necessary for a price floor to have an impact on a market? Describe two  effects that a price floor can have on a market.

Accepted Answer

In order for a price floor to

Question 13

Exhibit 4-6
 
Refer to Exhibit 4-6. Suppose the minimum wage is set at $7. The result will be

Accepted Answer

A) a surplus of unskilled workers. 
B) a shortage of unskilled workers. 
C) no effect on the market for unskilled labor. 
D) a change in the equilibrium wage rate. 
A) a surplus of unskilled workers. 
B) a shortage of unskilled workers. 
C) no effect on the market for unskilled labor. 
D) a change in the equilibrium wage rate.

Question 14

Which of the following statement is false  based on information presented in the textbook?

Accepted Answer

A) There is evidence of a shortage in the market for kidneys (for transplants). 
B) The waiting list for transplanted kidneys is used as a non-price rationing device. 
C) There is a price ceiling in the market for transplanted kidneys at a price of $0. 
D) In the market for transplanted kidneys the legal price is the same as the equilibrium price. 
E) ​It is currently unlawful to buy or sell kidneys at any positive price. 
A) There is evidence of a shortage in the market for kidneys (for transplants). 
B) The waiting list for transplanted kidneys is used as a non-price rationing device. 
C) There is a price ceiling in the market for transplanted kidneys at a price of $0. 
D) In the market for transplanted kidneys the legal price is the same as the equilibrium price. 
E) ​It is currently unlawful to buy or sell kidneys at any positive price.

Question 15

If the price of good X is $90 and the price of good Y is $30, it follows that the relative price of one unit of good Y is ___________ unit(s)of good X.

Accepted Answer

A) 0.33 
B) 1.33 
C) 3.00 
D) 2.00 
E) There is not enough information to answer the question. 
A) 0.33 
B) 1.33 
C) 3.00 
D) 2.00 
E) There is not enough information to answer the question.

Question 16

Exhibit 4-3  
Refer to Exhibit 4-3. If price P1 is a price ceiling, then

Accepted Answer

A) there is a surplus in the market for good X. 
B) the highest price that can legally be charged in this market is P3. 
C) the price at which exchange legally takes place is P2. 
D) the price at which exchange legally takes place is P1. 
A) there is a surplus in the market for good X. 
B) the highest price that can legally be charged in this market is P3. 
C) the price at which exchange legally takes place is P2. 
D) the price at which exchange legally takes place is P1.

Question 17

Exhibit 4-3  
Refer to Exhibit 4-3. Which of the following is true?

Accepted Answer

A) If price P3 is set as a price ceiling it will have an effect on the market for good X. 
B) If price P3 is set as a price floor it will have an effect on the market for good X. 
C) Price P3 is the equilibrium price for good X. 
D) Price P3 is the highest price that can legally be charged in the market for good X. 
A) If price P3 is set as a price ceiling it will have an effect on the market for good X. 
B) If price P3 is set as a price floor it will have an effect on the market for good X. 
C) Price P3 is the equilibrium price for good X. 
D) Price P3 is the highest price that can legally be charged in the market for good X.

Question 18

Which of the following is true?

Accepted Answer

A) Buyers always prefer lower prices to higher prices. 
B) Buyers never prefer lower prices to higher prices. 
C) Buyers rarely prefer lower prices to higher prices. 
D) Buyers prefer lower prices to higher prices, ceteris paribus. 
A) Buyers always prefer lower prices to higher prices. 
B) Buyers never prefer lower prices to higher prices. 
C) Buyers rarely prefer lower prices to higher prices. 
D) Buyers prefer lower prices to higher prices, ceteris paribus.

Question 19

Exhibit 4-6
 
Refer to Exhibit 4-6. Suppose the minimum wage is set at $5. The result will be

Accepted Answer

A) unemployment. 
B) a shortage of unskilled labor. 
C) no impact on the unskilled labor market. 
D) a prolonged surplus of unskilled labor. 
A) unemployment. 
B) a shortage of unskilled labor. 
C) no impact on the unskilled labor market. 
D) a prolonged surplus of unskilled labor.

Question 20

Suppose that the government sets a price ceiling in the market for potatoes at $0.75 per pound of potatoes. If the equilibrium price of potatoes is $1.10, the result of the price ceiling will be a _____________ of potatoes and ____________ exchanges will be made with the price ceiling than would be made in a free market.

Accepted Answer

A) shortage; fewer 
B) surplus; fewer 
C) shortage; more 
D) surplus; more 
A) shortage; fewer 
B) surplus; fewer 
C) shortage; more 
D) surplus; more

Exam 4: Prices: Free, Controlled, and Relative

A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to

Exhibit 4-1 Refer to Exhibit 4-1. At the equilibrium price, ________ units of the good would be exchanged. With a price ceiling, _______ units of the good would be exchanged.

Exhibit 4-3 Refer to Exhibit 4-3. If price P1 is a price ceiling, then

Exhibit 4-3 Refer to Exhibit 4-3. If price P3 is a price ceiling, then

Exhibit 4-9 Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $13. _________ units would be exchanged at the equilibrium price and ____________ units would be exchanged with the price ceiling in effect.

The need for a rationing device results from scarcity.

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

A shortage of unskilled labor will occur if the minimum wage is set below the equilibrium wage in the unskilled labor market.

There are two goods in the economy: tea and rice. If the relative price of tea has increased it could be a result of

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Exhibit 4-6 Refer to Exhibit 4-6. Suppose the minimum wage is set at $7. The result will be

Which of the following statement is false based on information presented in the textbook?

If the price of good X is $90 and the price of good Y is $30, it follows that the relative price of one unit of good Y is ___________ unit(s)of good X.

Exhibit 4-3 Refer to Exhibit 4-3. If price P1 is a price ceiling, then

Exhibit 4-3 Refer to Exhibit 4-3. Which of the following is true?

Which of the following is true?

Exhibit 4-6 Refer to Exhibit 4-6. Suppose the minimum wage is set at $5. The result will be

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 4-1 Refer to Exhibit 4-1. At the equilibrium price, __ units of the good would be exchanged. With a price ceiling, _ units of the good would be exchanged.

Exhibit 4-3 Refer to Exhibit 4-3. If price P₁ is a price ceiling, then

Exhibit 4-3 Refer to Exhibit 4-3. If price P₃ is a price ceiling, then

Exhibit 4-9 Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $13. _ units would be exchanged at the equilibrium price and ____ units would be exchanged with the price ceiling in effect.

Exhibit 4-3 Refer to Exhibit 4-3. If price P₁ is a price ceiling, then