Exam 4: Prices: Free, Controlled, and Relative

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Price ceilings sometimes result in some buyers and sellers purchasing the good at prohibited prices.

(True/False)
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​Exhibit 4-11 ​Exhibit 4-11   Refer to Exhibit 4-11.  Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.  The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units. Refer to Exhibit 4-11.  Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.  The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units.

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Exhibit 4-8 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 P<sub>F</sub>.  What has happened to the producers' surplus as a result of the imposition of the price floor? 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?

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If the minimum wage law sets a price floor that is below the equilibrium wage in the unskilled labor market, the minimum wage will create a shortage of unskilled labor.

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It is possible for the absolute price of a good to rise at the same time that the good's relative price is falling.

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The number of unskilled workers employed before and after an increase in the minimum wage is found to be the same. This means

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If the price of good X is $100 and the price of good Y is $40, it follows that the relative price of one unit of good Y is ___________ unit(s)of good X.

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Exhibit 4-8 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 P<sub>F</sub>.  What is the size of the total surplus at P<sub>F</sub>? 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?

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

(Multiple Choice)
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Exhibit 4-2 Exhibit 4-2   Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. Which of the following is true? Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. Which of the following is true?

(Multiple Choice)
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Someone says, "Even though the equilibrium wage rate is $8 an hour in the unskilled labor market, if we impose a minimum wage of $10 an hour, no one currently working will lose his or her job." This person must believe that the

(Multiple Choice)
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Exhibit 4-9 Exhibit 4-9   Refer to Exhibit 4-9.  Suppose that the government imposes a price ceiling at a price of $15.  The number of units that would be exchanged in this market would be Refer to Exhibit 4-9.  Suppose that the government imposes a price ceiling at a price of $15.  The number of units that would be exchanged in this market would be

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The minimum wage is a good example of a price floor.

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Exhibit 4-3 Exhibit 4-3   Refer to Exhibit 4-3. If price P<sub>1</sub> is a price floor, then Refer to Exhibit 4-3. If price P1 is a price floor, then

(Multiple Choice)
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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

(Multiple Choice)
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Exhibit 4-3 Exhibit 4-3   Refer to Exhibit 4-3. Suppose that the seller creates a tie-in sale between goods X and Y. If P<sub>1</sub> is a price ceiling on good X, the highest price buyers would be willing to pay for good Y is Refer to Exhibit 4-3. Suppose that the seller creates a tie-in sale between goods X and Y. If P1 is a price ceiling on good X, the highest price buyers would be willing to pay for good Y is

(Multiple Choice)
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The absolute price of a good is the price of that good in terms of another good.

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

(Multiple Choice)
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Exhibit 4-1 Exhibit 4-1   Refer to Exhibit 4-1. How many fewer units are bought and sold because of the price ceiling than would have been bought and sold at the equilibrium price? Refer to Exhibit 4-1. How many fewer units are bought and sold because of the price ceiling than would have been bought and sold at the equilibrium price?

(Multiple Choice)
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If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

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