Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

​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.

Accepted Answer

A) 20 
B) 40 
C) 60 
D) 100 
A) 20 
B) 40 
C) 60 
D) 100

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)

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) the change in minimum wage created a surplus of workers in the unskilled labor market. 
B) the change in minimum wage created a shortage of work 
C) the minimum wage could still be below the equilibrium wage for unskilled labor. 
D) changes in minimum wage never have an impact on the unskilled labor market. 
A) the change in minimum wage created a surplus of workers in the unskilled labor market. 
B) the change in minimum wage created a shortage of work 
C) the minimum wage could still be below the equilibrium wage for unskilled labor. 
D) changes in minimum wage never have an impact on the unskilled labor market.

Question 7

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.

Accepted Answer

A) 0.40 
B) 0.20 
C) 2.50 
D) 4.00 
E) There is not enough information to answer the question. 
A) 0.40 
B) 0.20 
C) 2.50 
D) 4.00 
E) There is not enough information to answer the question.

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 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 9

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 10

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?

Accepted Answer

A) At equilibrium, the quantity demanded is 700 units. 
B) At the price ceiling, there is a surplus of orange juice. 
C) The quantity supplied at the price ceiling will equal the quantity exchanged. 
D) The quantity demanded at the price ceiling will equal the quantity supplied. 
E) The quantity demanded at the price ceiling will equal the quantity exchanged. 
A) At equilibrium, the quantity demanded is 700 units. 
B) At the price ceiling, there is a surplus of orange juice. 
C) The quantity supplied at the price ceiling will equal the quantity exchanged. 
D) The quantity demanded at the price ceiling will equal the quantity supplied. 
E) The quantity demanded at the price ceiling will equal the quantity exchanged.

Question 11

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

Accepted Answer

A) demand curve for unskilled labor is vertical. 
B) demand curve for unskilled labor is downward-sloping. 
C) supply curve for unskilled labor is downward-sloping. 
D) supply curve for unskilled labor is horizontal. 
A) demand curve for unskilled labor is vertical. 
B) demand curve for unskilled labor is downward-sloping. 
C) supply curve for unskilled labor is downward-sloping. 
D) supply curve for unskilled labor is horizontal.

Question 12

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

Accepted Answer

A) 150, since that is the equilibrium quantity and the price ceiling is above the equilibrium price. 
B) 80, since that is the number of units demanded at the price ceiling. 
C) 260, since that is the number of units supplied at the price ceiling. 
D) 170, since that is the average of the quantity demanded and the quantity supplied at the price ceiling. 
A) 150, since that is the equilibrium quantity and the price ceiling is above the equilibrium price. 
B) 80, since that is the number of units demanded at the price ceiling. 
C) 260, since that is the number of units supplied at the price ceiling. 
D) 170, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) the quantity exchanged is Q1. 
B) there is a surplus in the market for good X. 
C) it is the lowest price that can legally be charged in the market for good X. 
D) the market is in equilibrium at price P1. 
A) the quantity exchanged is Q1. 
B) there is a surplus in the market for good X. 
C) it is the lowest price that can legally be charged in the market for good X. 
D) the market is in equilibrium at price P1.

Question 15

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 16

Exhibit 4-3  
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

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P3 - P1. 
E) P1 + P2. 
A) P1. 
B) P2. 
C) P3. 
D) P3 - P1. 
E) P1 + P2.

Question 17

The absolute price of a good is the price of that good in terms of another good.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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?

Accepted Answer

A) 50 
B) 60 
C) 65 
D) 100 
A) 50 
B) 60 
C) 65 
D) 100

Question 20

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 __________.

Accepted Answer

A) $4,000; $2,000 
B) $1,000; $2,000 
C) $2,000; $1,000 
D) $1,000; $250 
A) $4,000; $2,000 
B) $1,000; $2,000 
C) $2,000; $1,000 
D) $1,000; $250

Exam 4: Prices: Free, Controlled, and Relative

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

​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.

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?

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.

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

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

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.

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?

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

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?

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

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

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

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

Exhibit 4-3 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

The absolute price of a good is the price of that good in terms of another good.

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

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?

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 __________.

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 4-11 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.

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 4-8 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 4-3 Refer to Exhibit 4-3. If price P₁ is a price floor, then

Exhibit 4-3 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

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

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 .