Question 1

A price floor 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 at which all units of the good must be legally sold. 
D) minimum price below which legal trades can 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 at which all units of the good must be legally sold. 
D) minimum price below which legal trades can be made.

Question 2

Exhibit 4-7  
Refer to Exhibit 4-7. How many unskilled workers do firms want to employ at the minimum wage?

Accepted Answer

A) N2 
B) N1 
C) N3 
D) N1 + N3 
A) N2 
B) N1 
C) N3 
D) N1 + N3

Question 3

The minimum wage is an example of a

Accepted Answer

A) price door. 
B) price wall. 
C) price floor. 
D) price ceiling. 
A) price door. 
B) price wall. 
C) price floor. 
D) price ceiling.

Question 4

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.  How many fewer units of wheat will be sold at the price floor than at the equilibrium price?

Accepted Answer

A) Q2 - Q1 
B) Q3 - Q2 
C) Q3 - Q1 
D) Q2 
A) Q2 - Q1 
B) Q3 - Q2 
C) Q3 - Q1 
D) Q2

Question 5

Suppose that the price of peanut butter is $3 per pound and the price of almond butter is $5 per pound.  If the price of peanut butter rises to $3.60 and the price of almond butter rises to $5.50, then the absolute price of peanut butter has _______________ and the relative price of peanut butter has _______________.

Accepted Answer

A) risen; fallen 
B) fallen; risen 
C) risen; risen 
D) fallen; fallen 
A) risen; fallen 
B) fallen; risen 
C) risen; risen 
D) fallen; fallen

Question 6

A shortage of kidneys (for transplants)results from

Accepted Answer

A) the legal price being set below the equilibrium price. 
B) the legal price being set above the equilibrium price. 
C) a price floor being set in the kidney market at P = $0, assuming the equilibrium price is greater than $0. 
D) a price ceiling being set in the kidney market at P = $10,000, assuming the equilibrium price is equal to $0. 
A) the legal price being set below the equilibrium price. 
B) the legal price being set above the equilibrium price. 
C) a price floor being set in the kidney market at P = $0, assuming the equilibrium price is greater than $0. 
D) a price ceiling being set in the kidney market at P = $10,000, assuming the equilibrium price is equal to $0.

Question 7

Exhibit 4-7  
Refer to Exhibit 4-7. How many fewer persons work in the unskilled labor market at the minimum wage (WM)than at the equilibrium wage (W1)?

Accepted Answer

A) (N2 - N1)persons 
B) (N1 - N3)persons 
C) (N2 - N3)persons 
D) N3 persons 
A) (N2 - N1)persons 
B) (N1 - N3)persons 
C) (N2 - N3)persons 
D) N3 persons

Question 8

Suppose that the government sets a price floor in the market for milk at $2.15 per gallon of milk. If the equilibrium price of milk is $1.99, the result of the price floor will be a _____________ of milk and ____________ exchanges will be made with the price floor 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

Question 9

A tax placed on a good can make that good relatively more expensive and its substitutes relatively less expensive.

Accepted Answer

A) True 
 B)False

Question 10

​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.  How many fewer units would be exchanged at the price ceiling than would be exchanged if the market for good ABC were a free market?

Accepted Answer

A) 20 
B) 40 
C) 60 
D) 80 
E) 100 
A) 20 
B) 40 
C) 60 
D) 80 
E) 100

Question 11

Exhibit 4-9   Refer to Exhibit 4-9.  Suppose that the government imposes a price ceiling at a price of $10.  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 below the equilibrium price. 
B) 220, since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied). 
C) 90, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). 
D) 155, 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 below the equilibrium price. 
B) 220, since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied). 
C) 90, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). 
D) 155, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question 12

One of the effects of a price floor (set above equilibrium price)is

Accepted Answer

A) a surplus. 
B) higher-quality goods are produced. 
C) more satisfied customers. 
D) a shortage. 
A) a surplus. 
B) higher-quality goods are produced. 
C) more satisfied customers. 
D) a shortage.

Question 13

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 14

Buyers always prefer lower prices to higher prices.

Accepted Answer

A) True 
 B)False

Question 15

If the absolute price of a new car is $30,000 and the relative price of a laptop computer in terms of cars is 1\30 of a car, it follows that the absolute price of the laptop is

Accepted Answer

A) $10,000. 
B) $1,000. 
C) $3,000. 
D) $2,000. 
E) $1,500. 
A) $10,000. 
B) $1,000. 
C) $3,000. 
D) $2,000. 
E) $1,500.

Question 16

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 change in the total surplus at the price floor, compared to at the equilibrium price?

Accepted Answer

A) There was a gain in total surplus equal to (area 1 + 2 + 3) 
B) There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) 
C) There was a loss in total surplus equal to (area 4 + 5) 
D) There was a loss in total surplus equal to (area 4 + 5 + 6 ) 
A) There was a gain in total surplus equal to (area 1 + 2 + 3) 
B) There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) 
C) There was a loss in total surplus equal to (area 4 + 5) 
D) There was a loss in total surplus equal to (area 4 + 5 + 6 )

Question 17

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

Accepted Answer

A) Graph (1): There would be a shortage of the good if a price floor is set at P3. 
B) Graph (2): As supply increases, equilibrium quantity remains constant. 
C) Graph (3): As demand increases, equilibrium price remains constant. 
D) Graph (4): As supply changes, equilibrium price stays the same. 
A) Graph (1): There would be a shortage of the good if a price floor is set at P3. 
B) Graph (2): As supply increases, equilibrium quantity remains constant. 
C) Graph (3): As demand increases, equilibrium price remains constant. 
D) Graph (4): As supply changes, equilibrium price stays the same.

Question 18

Price serves as

Accepted Answer

A) a rationing device and a transmitter of information. 
B) a transmitter of information, but not a rationing device. 
C) a rationing device, but not a transmitter of information. 
D) neither a rationing device nor a transmitter of information. 
A) a rationing device and a transmitter of information. 
B) a transmitter of information, but not a rationing device. 
C) a rationing device, but not a transmitter of information. 
D) neither a rationing device nor a transmitter of information.

Question 19

If the relative price of one unit of good X is 5 units of good Y, then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________.

Accepted Answer

A) $20,000; $10,000 
B) $40,000; $8,000 
C) $30,000; $5,0000 
D) $5,000; $40,000 
A) $20,000; $10,000 
B) $40,000; $8,000 
C) $30,000; $5,0000 
D) $5,000; $40,000

Question 20

​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 result of the price ceiling would be a ____________ of ______ units of good ABC.

Accepted Answer

A) shortage; 20 
B) surplus; 20 
C) shortage; 60 
D) surplus; 60 
A) shortage; 20 
B) surplus; 20 
C) shortage; 60 
D) surplus; 60

Exam 4: Prices: Free, Controlled, and Relative

A price floor is a government-mandated

Exhibit 4-7 Refer to Exhibit 4-7. How many unskilled workers do firms want to employ at the minimum wage?

The minimum wage is an example of a

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. How many fewer units of wheat will be sold at the price floor than at the equilibrium price?

A shortage of kidneys (for transplants)results from

Exhibit 4-7 Refer to Exhibit 4-7. How many fewer persons work in the unskilled labor market at the minimum wage (WM)than at the equilibrium wage (W1)?

A tax placed on a good can make that good relatively more expensive and its substitutes relatively less expensive.

​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. How many fewer units would be exchanged at the price ceiling than would be exchanged if the market for good ABC were a free market?

Exhibit 4-9 Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. The number of units that would be exchanged in this market would be

One of the effects of a price floor (set above equilibrium price)is

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

Buyers always prefer lower prices to higher prices.

If the absolute price of a new car is $30,000 and the relative price of a laptop computer in terms of cars is 1\30 of a car, it follows that the absolute price of the laptop is

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 change in the total surplus at the price floor, compared to at the equilibrium price?

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

Price serves as

If the relative price of one unit of good X is 5 units of good Y, then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________.

​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 result of the price ceiling would be a ____________ of ______ units of good ABC.

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. How many fewer units of wheat will be sold at the price floor than at the equilibrium price?

Exhibit 4-7 Refer to Exhibit 4-7. How many fewer persons work in the unskilled labor market at the minimum wage (W_M)than at the equilibrium wage (W₁)?

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. How many fewer units would be exchanged at the price ceiling than would be exchanged if the market for good ABC were a free market?

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 change in the total surplus at the price floor, compared to at the equilibrium price?

If the relative price of one unit of good X is 5 units of good Y, then it follows that the absolute price of good X can be and the absolute price of good Y can be .

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 result of the price ceiling would be a ______ of units of good ABC.