Question 1

The long-run effect of rent control on an area includes

Accepted Answer

A)  rampant building of new low-income housing. 
B)  many new luxury apartments new luxury apartments will be built. 
C)  new investors into the real estate market in the area. 
D)  less investment into the real estate market in the area. 
A)  rampant building of new low-income housing. 
B)  many new luxury apartments new luxury apartments will be built. 
C)  new investors into the real estate market in the area. 
D)  less investment into the real estate market in the area.

Question 2

In a market system, which component conveys information about what is relatively scarce and what is relatively abundant?

Accepted Answer

A)  The number of producers 
B)  The number of consumers 
C)  Prices 
D)  The amount of government regulation 
A)  The number of producers 
B)  The number of consumers 
C)  Prices 
D)  The amount of government regulation

Question 3

In the price system,

Accepted Answer

A)  prices are set by government action. 
B)  consumers alone set the price. 
C)  producers alone set the price. 
D)  prices are set by the interaction of supply and demand. 
A)  prices are set by government action. 
B)  consumers alone set the price. 
C)  producers alone set the price. 
D)  prices are set by the interaction of supply and demand.

Question 4

Which of the following statements about markets is correct? I. A market helps resources move to their highest-valued uses by means of prices.
II) A market encompasses the exchange arrangements of both buyers and sellers.

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

Question 5

Some oil refineries were damaged by Hurricane Ike of 2008, leading to

Accepted Answer

A)  a decrease in supply of gasoline. 
B)  a decrease in quantity supplied of gasoline. 
C)  a decrease in demand for gasoline. 
D)  a decrease in quantity demanded for gasoline. 
A)  a decrease in supply of gasoline. 
B)  a decrease in quantity supplied of gasoline. 
C)  a decrease in demand for gasoline. 
D)  a decrease in quantity demanded for gasoline.

Question 6

An import quota will

Accepted Answer

A)  lead to a shift of the demand curve. 
B)  leave the equilibrium price unchanged and increase the quantity sold. 
C)  limit the amount of a foreign good that can be brought into the United States. 
D)  limit the amount of a good local producers can make. 
A)  lead to a shift of the demand curve. 
B)  leave the equilibrium price unchanged and increase the quantity sold. 
C)  limit the amount of a foreign good that can be brought into the United States. 
D)  limit the amount of a good local producers can make.

Question 7

If both the demand curve and the supply curve shift to the right, we can unambiguously conclude that the

Accepted Answer

A)  market clearing price will increase. 
B)  market clearing price will decrease. 
C)  equilibrium quantity will increase. 
D)  equilibrium quantity will decrease. 
A)  market clearing price will increase. 
B)  market clearing price will decrease. 
C)  equilibrium quantity will increase. 
D)  equilibrium quantity will decrease.

Question 8

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 9

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

Accepted Answer

A)  production excess. 
B)  excess demand. 
C)  market surplus. 
D)  producer surplus. 
A)  production excess. 
B)  excess demand. 
C)  market surplus. 
D)  producer surplus.

Question 10

Which of the following is an effect of a minimum wage law that establishes a ceiling wage below the current market clearing wage?

Accepted Answer

A)  Surplus labor, or unemployment 
B)  A decrease in the market clearing wage 
C)  A decrease in the quantity of labor supplied 
D)  An increase in the quantity of labor supplied 
A)  Surplus labor, or unemployment 
B)  A decrease in the market clearing wage 
C)  A decrease in the quantity of labor supplied 
D)  An increase in the quantity of labor supplied

Question 11

In some developing countries and in some former Communist countries ,people exchange their domestic currencies for foreign currencies such as the dollar in black markets. Why would this practice go on?

Accepted Answer

The country must have some restrictions

Question 12

-Refer to the above figure. Other things being equal, when the government imposes a price floor at P2, then we would expect

Accepted Answer

A)  the quantity demanded is Q2. 
B)  a surplus will occur. 
C)  price to decline until an equilibrium is achieved at P0. 
D)  consumers to bid against each other for goods and force the price even higher. 
A)  the quantity demanded is Q2. 
B)  a surplus will occur. 
C)  price to decline until an equilibrium is achieved at P0. 
D)  consumers to bid against each other for goods and force the price even higher.

Question 13

Which of the following statements is most accurate regarding who benefits and loses from establishment of a minimum wage above the market clearing wage?

Accepted Answer

A)  Individuals who obtain jobs benefit because they earn a higher wage, but some individuals lose because employers will not hire them at the minimum wage. 
B)  All workers benefit equally from the establishment of the minimum wage because just as many workers as before remain employed, and all earn the higher minimum wage. 
C)  All employers benefit equally from the establishment of the minimum wage because they are able to hire fewer workers at a lower wage. 
D)  All employers lose because they must pay the higher minimum wage to the same number of employees as they did before the minimum wage was established. 
A)  Individuals who obtain jobs benefit because they earn a higher wage, but some individuals lose because employers will not hire them at the minimum wage. 
B)  All workers benefit equally from the establishment of the minimum wage because just as many workers as before remain employed, and all earn the higher minimum wage. 
C)  All employers benefit equally from the establishment of the minimum wage because they are able to hire fewer workers at a lower wage. 
D)  All employers lose because they must pay the higher minimum wage to the same number of employees as they did before the minimum wage was established.

Question 14

In a situation in which rationing is by queues, the total price of the rationed good is

Accepted Answer

A)  equal to the funds paid for the good. 
B)  less than the funds paid for the good. 
C)  equal to the funds paid for the good plus the opportunity cost of the time spent waiting. 
D)  equal to the funds paid for the good less the opportunity cost of the time spent waiting. 
A)  equal to the funds paid for the good. 
B)  less than the funds paid for the good. 
C)  equal to the funds paid for the good plus the opportunity cost of the time spent waiting. 
D)  equal to the funds paid for the good less the opportunity cost of the time spent waiting.

Question 15

Goods X and Y are complementary goods. An increase in the price of good X has occurred. In the market for good Y this 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 16

-Assume that the initial demand and supply curves in the above figure are DA and SA, respectively. The initial equilibrium price and quantity are

Accepted Answer

A)  P1 and E. 
B)  P3 and F. 
C)  P1 and G. 
D)  P2 and F. 
A)  P1 and E. 
B)  P3 and F. 
C)  P1 and G. 
D)  P2 and F.

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

Suppose a price ceiling is currently set below the equilibrium price. Now suppose that policy makers decide to lower the price ceiling. This reduction in the price ceiling will cause which of the following to occur?

Accepted Answer

A)  The shortage in the market will decrease. 
B)  The shortage in the market will increase. 
C)  The surplus in the market will decrease. 
D)  The surplus in the market will increase. 
A)  The shortage in the market will decrease. 
B)  The shortage in the market will increase. 
C)  The surplus in the market will decrease. 
D)  The surplus in the market will increase.

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

In economic terms, the total price of a pound of meat for an individual who has waited in line is

Accepted Answer

A)  the money price paid to the butcher for the pound of meat. 
B)  the money price of meat relative to the price of bread or other necessity. 
C)  the money price of the meat plus the opportunity cost of time spent waiting in line. 
D)  the money price of an equal amount of meat substitute, such as beans and rice. 
A)  the money price paid to the butcher for the pound of meat. 
B)  the money price of meat relative to the price of bread or other necessity. 
C)  the money price of the meat plus the opportunity cost of time spent waiting in line. 
D)  the money price of an equal amount of meat substitute, such as beans and rice.

Exam 4: Extensions of Demand and Supply Analysis

The long-run effect of rent control on an area includes

In a market system, which component conveys information about what is relatively scarce and what is relatively abundant?

In the price system,

Which of the following statements about markets is correct? I. A market helps resources move to their highest-valued uses by means of prices. II) A market encompasses the exchange arrangements of both buyers and sellers.

Some oil refineries were damaged by Hurricane Ike of 2008, leading to

An import quota will

If both the demand curve and the supply curve shift to the right, we can unambiguously conclude that the

A price floor that is set above market equilibrium will cause

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

Which of the following is an effect of a minimum wage law that establishes a ceiling wage below the current market clearing wage?

In some developing countries and in some former Communist countries ,people exchange their domestic currencies for foreign currencies such as the dollar in black markets. Why would this practice go on?

-Refer to the above figure. Other things being equal, when the government imposes a price floor at P2, then we would expect

Which of the following statements is most accurate regarding who benefits and loses from establishment of a minimum wage above the market clearing wage?

In a situation in which rationing is by queues, the total price of the rationed good is

Goods X and Y are complementary goods. An increase in the price of good X has occurred. In the market for good Y this will lead to

-Assume that the initial demand and supply curves in the above figure are DA and SA, respectively. The initial equilibrium price and quantity are

The gains from consumer surplus and producer surplus occur when

Suppose a price ceiling is currently set below the equilibrium price. Now suppose that policy makers decide to lower the price ceiling. This reduction in the price ceiling will cause which of the following to occur?

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

In economic terms, the total price of a pound of meat for an individual who has waited in line 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

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

-Refer to the above figure. Other things being equal, when the government imposes a price floor at P₂, then we would expect

-Assume that the initial demand and supply curves in the above figure are D_A and S_A, respectively. The initial equilibrium price and quantity are