Question 1

Government policies such as price controls, rent controls, and quantity restrictions have the effect of

Accepted Answer

A)  promoting the attainment of an unhindered market equilibrium. 
B)  allowing quantity demanded to adjust to equality with aggregate supply. 
C)  creating excess quantities demanded or excess quantities supplied. 
D)  pushing prices to market clearing levels more rapidly than private market forces. 
A)  promoting the attainment of an unhindered market equilibrium. 
B)  allowing quantity demanded to adjust to equality with aggregate supply. 
C)  creating excess quantities demanded or excess quantities supplied. 
D)  pushing prices to market clearing levels more rapidly than private market forces.

Question 2

Which of the following is NOT a predictable result of a price ceiling set below the market clearing price?

Accepted Answer

A)  An illegal market in the good 
B)  Excess quantity supplied 
C)  Excess quantity demanded 
D)  Lines to purchase the product 
A)  An illegal market in the good 
B)  Excess quantity supplied 
C)  Excess quantity demanded 
D)  Lines to purchase the product

Question 3

If the demand for a product rises and the supply stays the same

Accepted Answer

A)  the market clearing price will fall and the equilibrium quantity will rise. 
B)  the market clearing price will rise and the equilibrium quantity will fall. 
C)  both the market clearing price and the equilibrium quantity will fall. 
D)  both the market clearing price and the equilibrium quantity will rise. 
A)  the market clearing price will fall and the equilibrium quantity will rise. 
B)  the market clearing price will rise and the equilibrium quantity will fall. 
C)  both the market clearing price and the equilibrium quantity will fall. 
D)  both the market clearing price and the equilibrium quantity will rise.

Question 4

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 5

-According to the above figure, the market clearing wage rate is

Accepted Answer

A)    . 
B)  Wm. 
C)  We - Wm. 
D)  Wm + We. 
A)    . 
B)  Wm. 
C)  We - Wm. 
D)  Wm + We.

Question 6

If other factors remain unchanged, technological progress in producing good X definitely will lead to

Accepted Answer

A)  an increase in the market clearing price of good X and a decrease in the equilibrium quantity of good X. 
B)  an increase in both the market clearing price and the equilibrium quantity of good X. 
C)  a decrease in the market clearing price of good X and an increase in the equilibrium quantity of good X. 
D)  a decrease in both the market clearing price and the equilibrium quantity of good X. 
A)  an increase in the market clearing price of good X and a decrease in the equilibrium quantity of good X. 
B)  an increase in both the market clearing price and the equilibrium quantity of good X. 
C)  a decrease in the market clearing price of good X and an increase in the equilibrium quantity of good X. 
D)  a decrease in both the market clearing price and the equilibrium quantity of good X.

Question 7

An increase in supply, other things being equal, will cause which of the following to occur?

Accepted Answer

A)  quantity supplied to decrease. 
B)  quantity demanded to increase. 
C)  a rightward shift in the demand curve as the price falls. 
D)  a leftward shift in the demand curves as the price increases. 
A)  quantity supplied to decrease. 
B)  quantity demanded to increase. 
C)  a rightward shift in the demand curve as the price falls. 
D)  a leftward shift in the demand curves as the price increases.

Question 8

If the government should decide to legalize marijuana, all other things remaining the same, we should expect to see

Accepted Answer

A)  a decrease in the price of marijuana. 
B)  an increase in the price of marijuana. 
C)  a decrease in the demand for marijuana. 
D)  an increase in the use of imported versus domestic marijuana. 
A)  a decrease in the price of marijuana. 
B)  an increase in the price of marijuana. 
C)  a decrease in the demand for marijuana. 
D)  an increase in the use of imported versus domestic marijuana.

Question 9

Holding demand constant, an increase in supply leads to

Accepted Answer

A)  lower prices and higher quantity demanded. 
B)  lower prices and lower quantity demanded. 
C)  higher prices and higher quantity demanded. 
D)  higher prices and lower quantity demanded. 
A)  lower prices and higher quantity demanded. 
B)  lower prices and lower quantity demanded. 
C)  higher prices and higher quantity demanded. 
D)  higher prices and lower quantity demanded.

Question 10

Suppose we observe the following two simultaneous events in the market for beef. First, there is a decrease in the demand for beef due to changes in consumer tastes. And second, there is a reduction in supply due to cattle farmers selling their land to real estate developers. We know with certainty that these two simultaneous events will cause which of the following?

Accepted Answer

A)  no change in the equilibrium quantity and a reduction in the equilibrium price 
B)  an increase in the equilibrium quantity and in the equilibrium price 
C)  a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price 
D)  a decrease in the equilibrium quantity and an increase in the equilibrium price 
A)  no change in the equilibrium quantity and a reduction in the equilibrium price 
B)  an increase in the equilibrium quantity and in the equilibrium price 
C)  a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price 
D)  a decrease in the equilibrium quantity and an increase in the equilibrium price

Question 11

Which of the following will likely occur when price floors in agriculture are implemented?

Accepted Answer

A)  Quantity supplied will exceed quantity demanded. 
B)  Quantity demanded will exceed quantity supplied. 
C)  Farmland will be underutilized. 
D)  Supply will decrease. 
A)  Quantity supplied will exceed quantity demanded. 
B)  Quantity demanded will exceed quantity supplied. 
C)  Farmland will be underutilized. 
D)  Supply will decrease.

Question 12

Rationing through the price system

Accepted Answer

A)  leads to an inefficient use of available resources. 
B)  leads to high prices. 
C)  works only with government interference. 
D)  leads to an efficient use of available resources. 
A)  leads to an inefficient use of available resources. 
B)  leads to high prices. 
C)  works only with government interference. 
D)  leads to an efficient use of available resources.

Question 13

A black market may occur when

Accepted Answer

A)  the government imposes a price floor below the market clearing price. 
B)  the government imposes a price ceiling below the market clearing price. 
C)  the government imposes a price ceiling above the market clearing price. 
D)  the government does not impose either a price ceiling or a price floor. 
A)  the government imposes a price floor below the market clearing price. 
B)  the government imposes a price ceiling below the market clearing price. 
C)  the government imposes a price ceiling above the market clearing price. 
D)  the government does not impose either a price ceiling or a price floor.

Question 14

Which of the following is NOT a voluntary exchange?

Accepted Answer

A)  Tom's car is stolen from in front of his house. 
B)  Marie buys groceries. 
C)  Scott pays $10,000 for tuition and fees this semester. 
D)  Emily buys a $1,000 plane ticket to fly from New York to Dallas on short notice. 
A)  Tom's car is stolen from in front of his house. 
B)  Marie buys groceries. 
C)  Scott pays $10,000 for tuition and fees this semester. 
D)  Emily buys a $1,000 plane ticket to fly from New York to Dallas on short notice.

Question 15

Which of the following is most likely to generate a surplus?

Accepted Answer

A)  A price floor 
B)  A price ceiling 
C)  An illegal market 
D)  All of these 
A)  A price floor 
B)  A price ceiling 
C)  An illegal market 
D)  All of these

Question 16

A price floor set below the equilibrium price will cause which of the following?

Accepted Answer

A)  an increase in demand 
B)  a shortage 
C)  a surplus 
D)  none of the above 
A)  an increase in demand 
B)  a shortage 
C)  a surplus 
D)  none of the above

Question 17

An increase in the equilibrium quantity of good X can be caused by

Accepted Answer

A)  an increase the price of inputs utilized in producing good X. 
B)  an increase in the price of good X. 
C)  a technological improvement in the process of producing good X. 
D)  a reduction in the number of producers of good X. 
A)  an increase the price of inputs utilized in producing good X. 
B)  an increase in the price of good X. 
C)  a technological improvement in the process of producing good X. 
D)  a reduction in the number of producers of good X.

Question 18

-Refer to the above figure. Suppose the government imposes a minimum wage rate of $20.00 per hour. This will likely result in

Accepted Answer

A)  a surplus of labor. 
B)  a shortage of labor. 
C)  an equilibrium in the labor market. 
D)  an increase in the demand for labor. 
A)  a surplus of labor. 
B)  a shortage of labor. 
C)  an equilibrium in the labor market. 
D)  an increase in the demand for labor.

Question 19

If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price ________ and the equilibrium quantity ________.

Accepted Answer

A)  will fall, cannot be predicted 
B)  will rise, cannot be predicted 
C)  cannot be predicted, will fall 
D)  cannot be predicted, will rise 
A)  will fall, cannot be predicted 
B)  will rise, cannot be predicted 
C)  cannot be predicted, will fall 
D)  cannot be predicted, will rise

Question 20

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

Accepted Answer

A)  There would be a surplus of bread. 
B)  There would be a shortage of bread. 
C)  The supply of bread would increase. 
D)  The supply of bread would decrease. 
A)  There would be a surplus of bread. 
B)  There would be a shortage of bread. 
C)  The supply of bread would increase. 
D)  The supply of bread would decrease.

Exam 4: Extensions of Demand and Supply Analysis

Government policies such as price controls, rent controls, and quantity restrictions have the effect of

Which of the following is NOT a predictable result of a price ceiling set below the market clearing price?

If the demand for a product rises and the supply stays the same

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?

-According to the above figure, the market clearing wage rate is

If other factors remain unchanged, technological progress in producing good X definitely will lead to

An increase in supply, other things being equal, will cause which of the following to occur?

If the government should decide to legalize marijuana, all other things remaining the same, we should expect to see

Holding demand constant, an increase in supply leads to

Which of the following will likely occur when price floors in agriculture are implemented?

Rationing through the price system

A black market may occur when

Which of the following is NOT a voluntary exchange?

Which of the following is most likely to generate a surplus?

A price floor set below the equilibrium price will cause which of the following?

An increase in the equilibrium quantity of good X can be caused by

-Refer to the above figure. Suppose the government imposes a minimum wage rate of $20.00 per hour. This will likely result in

If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price ________ and the equilibrium quantity ________.

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price and the equilibrium quantity .