Question 1

A price floor that is set above market equilibrium will cause

Accepted Answer

A) an excess quantity demanded. 
B) a shortage. 
C) a surplus. 
D) queuing on the part of consumers. 
A) an excess quantity demanded. 
B) a shortage. 
C) a surplus. 
D) queuing on the part of consumers.

Question 2

An import quota for sugar results in an increase in

Accepted Answer

A) the domestic market price of sugar. 
B) the domestic demand for sugar. 
C) the domestic market supply of sugar. 
D) sugar imports. 
A) the domestic market price of sugar. 
B) the domestic demand for sugar. 
C) the domestic market supply of sugar. 
D) sugar imports.

Question 3

Consumer surplus is

Accepted Answer

A) the total difference between the total amount that consumers actually pay for an item and the total amount that they would have been willing to pay. 
B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. 
C) the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay. 
D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item. 
A) the total difference between the total amount that consumers actually pay for an item and the total amount that they would have been willing to pay. 
B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item. 
C) the total difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay. 
D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item.

Question 4

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when

Accepted Answer

A) supply increases and demand decreases 
B) supply decreases and demand increases. 
C) supply and demand for a product simultaneously decrease. 
D) supply and demand for a product simultaneously increase. 
A) supply increases and demand decreases 
B) supply decreases and demand increases. 
C) supply and demand for a product simultaneously decrease. 
D) supply and demand for a product simultaneously increase.

Question 5

-Refer to the above figure. A minimum wage has been set at WM. The amount of unemployment is

Accepted Answer

A) zero. 
B) at Qₑ. 
C) QS minus QD. 
D) not computable from the information given. 
A) zero. 
B) at Qₑ. 
C) QS minus QD. 
D) not computable from the information given.

Question 6

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Accepted Answer

A) create a shortage of agricultural products. 
B) result in the quantity of these products supplied exceeding the quantity demanded at the floor price. 
C) benefit taxpayers, who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price. 
D) benefit consumers, who are willing and able to purchase more agricultural products at the floor price. 
A) create a shortage of agricultural products. 
B) result in the quantity of these products supplied exceeding the quantity demanded at the floor price. 
C) benefit taxpayers, who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price. 
D) benefit consumers, who are willing and able to purchase more agricultural products at the floor price.

Question 7

Explain how agricultural price supports work and what the effects of the supports are.

Accepted Answer

Under agricultural price supports, the g

Question 8

In a price system, changes in prices

Accepted Answer

A) make it difficult for the system to function well. 
B) imply that people have made mistakes in the past. 
C) signal to everyone in the system what goods are relatively more or less scarce. 
D) signal to policy makers what goods should and should not be taxed more. 
A) make it difficult for the system to function well. 
B) imply that people have made mistakes in the past. 
C) signal to everyone in the system what goods are relatively more or less scarce. 
D) signal to policy makers what goods should and should not be taxed more.

Question 9

An import quota is

Accepted Answer

A) a quantity restriction. 
B) a price ceiling. 
C) a price floor. 
D) something imposed on agricultural goods grown by American farmers. 
A) a quantity restriction. 
B) a price ceiling. 
C) a price floor. 
D) something imposed on agricultural goods grown by American farmers.

Question 10

Chocolate has just been found to increase your expected life span by 5 years if you eat it every day. In the market for chocolate, this information will lead to

Accepted Answer

A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity. 
A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity.

Question 11

Prices ration goods to

Accepted Answer

A) the people who most deserve it. 
B) the people with the lowest opportunity cost of time. 
C) the people willing and able to pay the highest price. 
D) the richest people. 
A) the people who most deserve it. 
B) the people with the lowest opportunity cost of time. 
C) the people willing and able to pay the highest price. 
D) the richest people.

Question 12

When supply and demand for a product decrease simultaneously, we

Accepted Answer

A) can predict that both equilibrium price and quantity will increase. 
B) can predict that both equilibrium price and quantity will decrease. 
C) cannot predict equilibrium price, but know that equilibrium quantity will decrease. 
D) cannot predict the change in either the equilibrium quantity or equilibrium price. 
A) can predict that both equilibrium price and quantity will increase. 
B) can predict that both equilibrium price and quantity will decrease. 
C) cannot predict equilibrium price, but know that equilibrium quantity will decrease. 
D) cannot predict the change in either the equilibrium quantity or equilibrium price.

Question 13

The City Council of Happy Village is thinking about imposing rent controls. If they put rent controls in place, which constituency are they trying to please?

Accepted Answer

A) landlords 
B) all taxpayers 
C) existing tenants 
D) all voters 
A) landlords 
B) all taxpayers 
C) existing tenants 
D) all voters

Question 14

When the supply and/or demand curve shift, the new market clearing price is

Accepted Answer

A) reached instantaneously. 
B) reached only after the government intervenes in the market. 
C) reached after some period of adjustment. 
D) never reached. 
A) reached instantaneously. 
B) reached only after the government intervenes in the market. 
C) reached after some period of adjustment. 
D) never reached.

Question 15

Which of the following would likely result as a consequence of rent controls?

Accepted Answer

A) a reduction in the rate of construction of rental housing units 
B) unimproved buildings and apartment complexes 
C) limits on tenant mobility 
D) All of the above are correct. 
A) a reduction in the rate of construction of rental housing units 
B) unimproved buildings and apartment complexes 
C) limits on tenant mobility 
D) All of the above are correct.

Question 16

Which of the following statements is NOT true about exchanges in the market system?

Accepted Answer

A) In voluntary exchange both parties are better off because of the exchange. 
B) Exchanges occur only in situations of barter where the market price is irrelevant. 
C) Prices indicate what is relatively abundant and what is relatively scarce. 
D) Transaction costs in exchanges include the cost of enforcing a contract as well as the costs of information. 
A) In voluntary exchange both parties are better off because of the exchange. 
B) Exchanges occur only in situations of barter where the market price is irrelevant. 
C) Prices indicate what is relatively abundant and what is relatively scarce. 
D) Transaction costs in exchanges include the cost of enforcing a contract as well as the costs of information.

Question 17

The gains from consumer surplus and producer surplus occur when

Accepted Answer

A) both consumers and producers engage in voluntary exchange. 
B) consumers are willing to buy a good but producers are not willing to provide it. 
C) producers are willing to provide a good but consumers are not willing to pay for it. 
D) the government supplies the good instead of firms. 
A) both consumers and producers engage in voluntary exchange. 
B) consumers are willing to buy a good but producers are not willing to provide it. 
C) producers are willing to provide a good but consumers are not willing to pay for it. 
D) the government supplies the good instead of firms.

Question 18

-Refer to the above figure. If a price floor of $5 was set

Accepted Answer

A) the quantity sold would be 80 units. 
B) there would be a surplus of 40 units. 
C) there would be a shortage of 40 units. 
D) there would be a shortage of 20 units. 
A) the quantity sold would be 80 units. 
B) there would be a surplus of 40 units. 
C) there would be a shortage of 40 units. 
D) there would be a shortage of 20 units.

Question 19

One effect of a minimum wage in the market for low-skilled labor is

Accepted Answer

A) a shortage of low-skilled labor. 
B) a surplus of low-skilled labor. 
C) no effect in the market for low-skilled labor. 
D) an increase in demand for low-skilled labor. 
A) a shortage of low-skilled labor. 
B) a surplus of low-skilled labor. 
C) no effect in the market for low-skilled labor. 
D) an increase in demand for low-skilled labor.

Question 20

Which of the following statements about a price system is TRUE?
I. Prices ration goods and services.
II. Prices indicate relative scarcity.

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

A price floor that is set above market equilibrium will cause

An import quota for sugar results in an increase in

Consumer surplus is

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when

-Refer to the above figure. A minimum wage has been set at WM. The amount of unemployment is

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Explain how agricultural price supports work and what the effects of the supports are.

In a price system, changes in prices

An import quota is

Chocolate has just been found to increase your expected life span by 5 years if you eat it every day. In the market for chocolate, this information will lead to

Prices ration goods to

When supply and demand for a product decrease simultaneously, we

The City Council of Happy Village is thinking about imposing rent controls. If they put rent controls in place, which constituency are they trying to please?

When the supply and/or demand curve shift, the new market clearing price is

Which of the following would likely result as a consequence of rent controls?

Which of the following statements is NOT true about exchanges in the market system?

The gains from consumer surplus and producer surplus occur when

-Refer to the above figure. If a price floor of $5 was set

One effect of a minimum wage in the market for low-skilled labor is

Which of the following statements about a price system is TRUE? I. Prices ration goods and services. II. Prices indicate relative scarcity.

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Extensions of Demand and Supply Analysis

A price floor that is set above market equilibrium will cause

An import quota for sugar results in an increase in

Consumer surplus is

We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when

-Refer to the above figure. A minimum wage has been set at WM. The amount of unemployment is

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Explain how agricultural price supports work and what the effects of the supports are.

In a price system, changes in prices

An import quota is

Chocolate has just been found to increase your expected life span by 5 years if you eat it every day. In the market for chocolate, this information will lead to

Prices ration goods to

When supply and demand for a product decrease simultaneously, we

The City Council of Happy Village is thinking about imposing rent controls. If they put rent controls in place, which constituency are they trying to please?

When the supply and/or demand curve shift, the new market clearing price is

Which of the following would likely result as a consequence of rent controls?

Which of the following statements is NOT true about exchanges in the market system?

The gains from consumer surplus and producer surplus occur when

-Refer to the above figure. If a price floor of $5 was set

One effect of a minimum wage in the market for low-skilled labor is

Which of the following statements about a price system is TRUE? I. Prices ration goods and services. II. Prices indicate relative scarcity.

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters