Question 1

Intermediaries, known as middlemen, specialize in

Accepted Answer

A) reducing transaction costs. 
B) negotiating high prices for sellers. 
C) negotiating low prices for buyers. 
D) encouraging consumers to buy goods on credit, rather than with cash. 
A) reducing transaction costs. 
B) negotiating high prices for sellers. 
C) negotiating low prices for buyers. 
D) encouraging consumers to buy goods on credit, rather than with cash.

Question 2

When are black markets likely to arise?

Accepted Answer

A) when the government removes a price floor 
B) when the government enforces a price ceiling 
C) when there is a surplus of a good 
D) when the quantity supplied of a good exceeds the quantity demanded 
A) when the government removes a price floor 
B) when the government enforces a price ceiling 
C) when there is a surplus of a good 
D) when the quantity supplied of a good exceeds the quantity demanded

Question 3

Suppose the equilibrium quantity of ethanol has decreased. Which of the following could have caused this change?

Accepted Answer

A) a decrease in demand 
B) an increase in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied 
A) a decrease in demand 
B) an increase in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied

Question 4

Some Internet companies like Amazon reduce the transaction costs of many purchases by

Accepted Answer

A) providing misleading information about the quality of products. 
B) providing information about products and firms that supply those products. 
C) advertising sales at local discount stores. 
D) paying its employees low wages. 
A) providing misleading information about the quality of products. 
B) providing information about products and firms that supply those products. 
C) advertising sales at local discount stores. 
D) paying its employees low wages.

Question 5

In which of the following situations will both market clearing price and the equilibrium quantity decrease?

Accepted Answer

A) an increase in demand and no change in supply 
B) an increase in supply with no change in demand 
C) a decrease in supply with no change in demand 
D) a decrease in demand with no change in supply 
A) an increase in demand and no change in supply 
B) an increase in supply with no change in demand 
C) a decrease in supply with no change in demand 
D) a decrease in demand with no change in supply

Question 6

If the government sets a minimum price at which a good or service can be sold, it thereby creates

Accepted Answer

A) a price ceiling. 
B) a black market price. 
C) a price floor. 
D) an illegal price control. 
A) a price ceiling. 
B) a black market price. 
C) a price floor. 
D) an illegal price control.

Question 7

The objective of rent controls is to

Accepted Answer

A) ensure an adequate supply of rental housing for the poor. 
B) keep rents below levels that would be observed in a freely competitive market. 
C) encourage the construction of new rental units. 
D) raise revenue for the local government. 
A) ensure an adequate supply of rental housing for the poor. 
B) keep rents below levels that would be observed in a freely competitive market. 
C) encourage the construction of new rental units. 
D) raise revenue for the local government.

Question 8

Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

Accepted Answer

A) Market clearing price will rise, and equilibrium quantity will rise. 
B) Market clearing price will fall, and equilibrium quantity will fall. 
C) Market clearing price will rise, and equilibrium quantity will fall. 
D) Market clearing price will fall, and equilibrium quantity will rise. 
A) Market clearing price will rise, and equilibrium quantity will rise. 
B) Market clearing price will fall, and equilibrium quantity will fall. 
C) Market clearing price will rise, and equilibrium quantity will fall. 
D) Market clearing price will fall, and equilibrium quantity will rise.

Question 9

A decrease in demand and a decrease in supply will lead to

Accepted Answer

A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price quantity. 
C) an unambiguous decrease in price, but the effect on quantity is indeterminate. 
D) an unambiguous decrease in quantity, but the effect on price is indeterminate. 
A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price quantity. 
C) an unambiguous decrease in price, but the effect on quantity is indeterminate. 
D) an unambiguous decrease in quantity, but the effect on price is indeterminate.

Question 10

Which of the following is NOT an attempt to evade rent controls?

Accepted Answer

A) make life unpleasant for tenants 
B) require tenants to get furniture from the landlord 
C) subletting 
D) using the courts to challenge the sublease of a tenant 
A) make life unpleasant for tenants 
B) require tenants to get furniture from the landlord 
C) subletting 
D) using the courts to challenge the sublease of a tenant

Question 11

Suppose a price ceiling is set above the equilibrium price. Now suppose that policy makers decide to raise the price ceiling. This increase in the price ceiling will cause which of the following to occur?

Accepted Answer

A) The surplus in the market will increase. 
B) The surplus in the market will decrease. 
C) The shortage in the market will increase. 
D) none of the above 
A) The surplus in the market will increase. 
B) The surplus in the market will decrease. 
C) The shortage in the market will increase. 
D) none of the above

Question 12

What are the terms of exchange and how are these terms related to the price?

Accepted Answer

The terms of exchange are the terms unde

Question 13

Rationing occurs for goods

Accepted Answer

A) that have a positive price. 
B) that have a zero price. 
C) that have a negative price. 
D) that are not manufactured. 
A) that have a positive price. 
B) that have a zero price. 
C) that have a negative price. 
D) that are not manufactured.

Question 14

An increase in demand and an increase in supply will lead to

Accepted Answer

A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and quantity. 
C) an unambiguous increase in quantity, but the effect on price is indeterminate. 
D) an unambiguous increase in price, but the effect on quantity is indeterminate. 
A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and quantity. 
C) an unambiguous increase in quantity, but the effect on price is indeterminate. 
D) an unambiguous increase in price, but the effect on quantity is indeterminate.

Question 15

Which of the following is NOT a device to reduce transaction costs?

Accepted Answer

A) shopping centers 
B) auto dealers located close together 
C) government prohibitions on advertising 
D) banks that direct funds from savers to borrowers 
A) shopping centers 
B) auto dealers located close together 
C) government prohibitions on advertising 
D) banks that direct funds from savers to borrowers

Question 16

All of the following result from price floors in agriculture EXCEPT

Accepted Answer

A) surpluses of agricultural products that have price floors. 
B) higher prices to consumers for agricultural products that have price floors. 
C) lower prices to consumers for agricultural products that have price floors. 
D) governmental bureaucracy. 
A) surpluses of agricultural products that have price floors. 
B) higher prices to consumers for agricultural products that have price floors. 
C) lower prices to consumers for agricultural products that have price floors. 
D) governmental bureaucracy.

Question 17

-If an excess quantity of labor demanded exists in a free market, there is a tendency for

Accepted Answer

A) quantity supplied to rise. 
B) the wage rate to fall. 
C) quantity demanded to fall. 
D) the wage rate to rise. 
A) quantity supplied to rise. 
B) the wage rate to fall. 
C) quantity demanded to fall. 
D) the wage rate to rise.

Question 18

Suppose the market clearing price is $15 and the price ceiling is $17. The price that prevails in the market will be

Accepted Answer

A) $17. 
B) $15. 
C) less than $15. 
D) more than $17. 
A) $17. 
B) $15. 
C) less than $15. 
D) more than $17.

Question 19

All of the following reduce the transaction costs for consumers EXCEPT

Accepted Answer

A) eBay. 
B) a shopping mall. 
C) the Supreme Court decisions regarding the Second Amendment. 
D) a grocery store. 
A) eBay. 
B) a shopping mall. 
C) the Supreme Court decisions regarding the Second Amendment. 
D) a grocery store.

Question 20

The total gains from trade within a price system is

Accepted Answer

A) the area beneath the market demand curve and above the market clearing price plus the area above the market supply curve and beneath the market clearing price. 
B) the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price. 
C) the area beneath the market demand curve and above the market clearing price minus the area beneath the market supply curve and beneath the market clearing price. 
D) always equal to zero. 
A) the area beneath the market demand curve and above the market clearing price plus the area above the market supply curve and beneath the market clearing price. 
B) the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price. 
C) the area beneath the market demand curve and above the market clearing price minus the area beneath the market supply curve and beneath the market clearing price. 
D) always equal to zero.

Intermediaries, known as middlemen, specialize in

When are black markets likely to arise?

Suppose the equilibrium quantity of ethanol has decreased. Which of the following could have caused this change?

Some Internet companies like Amazon reduce the transaction costs of many purchases by

In which of the following situations will both market clearing price and the equilibrium quantity decrease?

If the government sets a minimum price at which a good or service can be sold, it thereby creates

The objective of rent controls is to

Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

A decrease in demand and a decrease in supply will lead to

Which of the following is NOT an attempt to evade rent controls?

Suppose a price ceiling is set above the equilibrium price. Now suppose that policy makers decide to raise the price ceiling. This increase in the price ceiling will cause which of the following to occur?

What are the terms of exchange and how are these terms related to the price?

Rationing occurs for goods

An increase in demand and an increase in supply will lead to

Which of the following is NOT a device to reduce transaction costs?

All of the following result from price floors in agriculture EXCEPT

-If an excess quantity of labor demanded exists in a free market, there is a tendency for

Suppose the market clearing price is $15 and the price ceiling is $17. The price that prevails in the market will be

All of the following reduce the transaction costs for consumers EXCEPT

The total gains from trade within a price system is

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

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Exam 4: Extensions of Demand and Supply Analysis

Intermediaries, known as middlemen, specialize in

When are black markets likely to arise?

Suppose the equilibrium quantity of ethanol has decreased. Which of the following could have caused this change?

Some Internet companies like Amazon reduce the transaction costs of many purchases by

In which of the following situations will both market clearing price and the equilibrium quantity decrease?

If the government sets a minimum price at which a good or service can be sold, it thereby creates

The objective of rent controls is to

Suppose that consumer income decreases and that hamburger is an inferior good. Which of the following will occur in the market for hamburger?

A decrease in demand and a decrease in supply will lead to

Which of the following is NOT an attempt to evade rent controls?

Suppose a price ceiling is set above the equilibrium price. Now suppose that policy makers decide to raise the price ceiling. This increase in the price ceiling will cause which of the following to occur?

What are the terms of exchange and how are these terms related to the price?

Rationing occurs for goods

An increase in demand and an increase in supply will lead to

Which of the following is NOT a device to reduce transaction costs?

All of the following result from price floors in agriculture EXCEPT

-If an excess quantity of labor demanded exists in a free market, there is a tendency for

Suppose the market clearing price is $15 and the price ceiling is $17. The price that prevails in the market will be

All of the following reduce the transaction costs for consumers EXCEPT

The total gains from trade within a price system is

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