Question 1

When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling:

Accepted Answer

A)  it is inefficient. 
B)  the transaction takes place on a black market. 
C)  there is an increase in quantity demanded. 
D)  there is a decrease in quantity demanded. 
A)  it is inefficient. 
B)  the transaction takes place on a black market. 
C)  there is an increase in quantity demanded. 
D)  there is a decrease in quantity demanded.

Question 2

Suppose that the CFL wants to give the "common fan" the opportunity to attend the Grey Cup,so it sets Grey Cup prices "low"-let's say that they set ticket prices for a regular seat at the Grey Cup to cost just $100.People who have tickets,however,can turn around and sell them online for $1 000 or more.If there are no transaction costs for fans with tickets to sell them,the true cost to a fan of attending the Grey Cup is:

Accepted Answer

A)  at most $100. 
B)  at least $1 000. 
C)  the monetary price paid to obtain the ticket. 
D)  $900 less than the opportunity cost of a ticket. 
A)  at most $100. 
B)  at least $1 000. 
C)  the monetary price paid to obtain the ticket. 
D)  $900 less than the opportunity cost of a ticket.

Question 3

An increase in producer surplus would most likely occur if:

Accepted Answer

A)  an effective price floor was imposed. 
B)  an effective price ceiling was imposed. 
C)  the market price of the good decreased. 
D)  no changes occurred in the market. 
A)  an effective price floor was imposed. 
B)  an effective price ceiling was imposed. 
C)  the market price of the good decreased. 
D)  no changes occurred in the market.

Question 4

A maximum price set below the equilibrium price is a:

Accepted Answer

A)  demand price. 
B)  supply price. 
C)  price floor. 
D)  price ceiling. 
A)  demand price. 
B)  supply price. 
C)  price floor. 
D)  price ceiling.

Question 5

A rent ceiling must be set above the equilibrium rent to be binding.

Accepted Answer

A) True 
 B)False

Question 6

Use the following to answer questions:  
-(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price _____ at _____,causing a _____ of _____.

Accepted Answer

A)  floor;P4;surplus;Q3-Q0 
B)  floor;P2;surplus;Q2-Q0 
C)  ceiling;P4;surplus;Q2-Q1 
D)  floor;P1;shortage;Q3-Q0 
A)  floor;P4;surplus;Q3-Q0 
B)  floor;P2;surplus;Q2-Q0 
C)  ceiling;P4;surplus;Q2-Q1 
D)  floor;P1;shortage;Q3-Q0

Question 7

Quota limits that are less than the market equilibrium quantity cause:

Accepted Answer

A)  the demand price to be above the supply price. 
B)  the quantity demanded to be more than the quantity supplied. 
C)  the quantity demanded to be less than the quantity supplied. 
D)  the demand price to be equal to the supply price. 
A)  the demand price to be above the supply price. 
B)  the quantity demanded to be more than the quantity supplied. 
C)  the quantity demanded to be less than the quantity supplied. 
D)  the demand price to be equal to the supply price.

Question 8

A price ceiling will have NO immediate effect if:

Accepted Answer

A)  it is set above the equilibrium price. 
B)  the equilibrium price is above the price ceiling. 
C)  it is set below the equilibrium price. 
D)  it creates a shortage. 
A)  it is set above the equilibrium price. 
B)  the equilibrium price is above the price ceiling. 
C)  it is set below the equilibrium price. 
D)  it creates a shortage.

Question 9

Use the following to answer question 
Figure: The Shrimp Market  
-The likely result of a binding price floor is a _____ of the good at a price _____ the equilibrium price.

Accepted Answer

A)  surplus;above 
B)  shortage;below 
C)  surplus;below 
D)  shortage;above 
A)  surplus;above 
B)  shortage;below 
C)  surplus;below 
D)  shortage;above

Question 10

Critics of the pharmaceutical industry often argue that price ceilings should be imposed on drug manufacturers.If this happened,the quality of drugs would improve.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer questions:  
-(Figure: Supply and Demand)Use Figure: Supply and Demand.A price ceiling of P3 causes:

Accepted Answer

A)  a shortage equal to the distance AB. 
B)  a surplus equal to the distance AB. 
C)  a shortage equal to the distance DE. 
D)  no change to the market. 
A)  a shortage equal to the distance AB. 
B)  a surplus equal to the distance AB. 
C)  a shortage equal to the distance DE. 
D)  no change to the market.

Question 12

Use the following to answer question 24:  
-(Table: The Market for Banana Muffins)Look at the table The Market for Banana Muffins.In response to popular anger over the high price of banana muffins and the extreme wealth of banana muffin producers,the government imposes a price ceiling of $1.20 per banana muffin.From this table,the price ceiling causes a _____ banana muffins.

Accepted Answer

A)  shortage of 3 000 
B)  shortage of 5 000 
C)  surplus of 8 000 
D)  surplus of 3 000 
A)  shortage of 3 000 
B)  shortage of 5 000 
C)  surplus of 8 000 
D)  surplus of 3 000

Question 13

If the demand curve for clams is downward sloping and the supply curve is upward sloping,a quota that is set below the equilibrium quantity will result in a supply price higher than the demand price.

Accepted Answer

A) True 
 B)False

Question 14

If the demand curve for clams is downward sloping and the supply curve is upward sloping,a quota that is set above the equilibrium quantity will have no immediate effect on the market.

Accepted Answer

A) True 
 B)False

Question 15

Economists in general agree that rent controls are:

Accepted Answer

A)  an efficient and equitable way to help low-income families. 
B)  an inefficient but sometimes effective way to help low-income families. 
C)  an efficient method of dealing with the shortages caused by price ceilings. 
D)  the only way to solve the problem of poverty. 
A)  an efficient and equitable way to help low-income families. 
B)  an inefficient but sometimes effective way to help low-income families. 
C)  an efficient method of dealing with the shortages caused by price ceilings. 
D)  the only way to solve the problem of poverty.

Question 16

If the supply curve for clams is upward sloping,a quota that is set below the equilibrium quantity will result in a supply price that is lower than the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer questions:
Figure: The Market for Sandwiches  
-A binding price ceiling will cause a persistent _____,and a binding price floor will cause a persistent _____.

Accepted Answer

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

Question 18

A persistent shortage may occur if:

Accepted Answer

A)  the government imposes a price ceiling below the equilibrium price. 
B)  the government imposes a price floor below the equilibrium price. 
C)  demand keeps falling. 
D)  supply shifts rightward. 
A)  the government imposes a price ceiling below the equilibrium price. 
B)  the government imposes a price floor below the equilibrium price. 
C)  demand keeps falling. 
D)  supply shifts rightward.

Question 19

The demand price of a given quantity of doughnuts is the price at which consumers will demand that quantity.The supply price for a given quantity is the price at which doughnut producers will supply that quantity.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that the average cost of a visit to the dentist is $100.If the government imposes a price ceiling of $50 on the cost of a dental visit,there will be:

Accepted Answer

A)  an excess supply of dental visits. 
B)  an excess demand for dental visits. 
C)  an increase in the equilibrium number of dental visits. 
D)  no change in the number of dental visits. 
A)  an excess supply of dental visits. 
B)  an excess demand for dental visits. 
C)  an increase in the equilibrium number of dental visits. 
D)  no change in the number of dental visits.

When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling:

An increase in producer surplus would most likely occur if:

A maximum price set below the equilibrium price is a:

A rent ceiling must be set above the equilibrium rent to be binding.

Use the following to answer questions: -(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price ___ at _,causing a _ of ___.

Quota limits that are less than the market equilibrium quantity cause:

A price ceiling will have NO immediate effect if:

Use the following to answer question Figure: The Shrimp Market -The likely result of a binding price floor is a _ of the good at a price _ the equilibrium price.

Critics of the pharmaceutical industry often argue that price ceilings should be imposed on drug manufacturers.If this happened,the quality of drugs would improve.

Use the following to answer questions: -(Figure: Supply and Demand)Use Figure: Supply and Demand.A price ceiling of P₃ causes:

If the demand curve for clams is downward sloping and the supply curve is upward sloping,a quota that is set below the equilibrium quantity will result in a supply price higher than the demand price.

If the demand curve for clams is downward sloping and the supply curve is upward sloping,a quota that is set above the equilibrium quantity will have no immediate effect on the market.

Economists in general agree that rent controls are:

If the supply curve for clams is upward sloping,a quota that is set below the equilibrium quantity will result in a supply price that is lower than the equilibrium price.

Use the following to answer questions: Figure: The Market for Sandwiches -A binding price ceiling will cause a persistent _,and a binding price floor will cause a persistent _.

A persistent shortage may occur if:

The demand price of a given quantity of doughnuts is the price at which consumers will demand that quantity.The supply price for a given quantity is the price at which doughnut producers will supply that quantity.

Suppose that the average cost of a visit to the dentist is $100.If the government imposes a price ceiling of $50 on the cost of a dental visit,there will be:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Graphs in Economics

Filters

Exam 4: Price Controls and Quotas: Meddling With Markets

When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling:

An increase in producer surplus would most likely occur if:

A maximum price set below the equilibrium price is a:

A rent ceiling must be set above the equilibrium rent to be binding.

Use the following to answer questions: -(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price _____ at _____,causing a _____ of _____.

Quota limits that are less than the market equilibrium quantity cause:

A price ceiling will have NO immediate effect if:

Use the following to answer question Figure: The Shrimp Market -The likely result of a binding price floor is a _____ of the good at a price _____ the equilibrium price.

Critics of the pharmaceutical industry often argue that price ceilings should be imposed on drug manufacturers.If this happened,the quality of drugs would improve.

Use the following to answer questions: -(Figure: Supply and Demand)Use Figure: Supply and Demand.A price ceiling of P3 causes:

If the demand curve for clams is downward sloping and the supply curve is upward sloping,a quota that is set below the equilibrium quantity will result in a supply price higher than the demand price.

If the demand curve for clams is downward sloping and the supply curve is upward sloping,a quota that is set above the equilibrium quantity will have no immediate effect on the market.

Economists in general agree that rent controls are:

If the supply curve for clams is upward sloping,a quota that is set below the equilibrium quantity will result in a supply price that is lower than the equilibrium price.

Use the following to answer questions: Figure: The Market for Sandwiches -A binding price ceiling will cause a persistent _____,and a binding price floor will cause a persistent _____.

A persistent shortage may occur if:

The demand price of a given quantity of doughnuts is the price at which consumers will demand that quantity.The supply price for a given quantity is the price at which doughnut producers will supply that quantity.

Suppose that the average cost of a visit to the dentist is $100.If the government imposes a price ceiling of $50 on the cost of a dental visit,there will be:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

International Trade

Macroeconomics: the Big Picture

Gdp and the Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Graphs in Economics

Filters

Use the following to answer questions: -(Figure: Supply and Demand in Agriculture)Use Figure: Supply and Demand in Agriculture.The government could help increase some farmers' income by setting a price ___ at _,causing a _ of ___.

Use the following to answer question Figure: The Shrimp Market -The likely result of a binding price floor is a _ of the good at a price _ the equilibrium price.

Use the following to answer questions: -(Figure: Supply and Demand)Use Figure: Supply and Demand.A price ceiling of P₃ causes:

Use the following to answer questions: Figure: The Market for Sandwiches -A binding price ceiling will cause a persistent _,and a binding price floor will cause a persistent _.