Question 1

Suppose that a binding price floor is in place in a particular market.If the market is deregulated and the price floor is removed:

Accepted Answer

A)  the quantity demanded will decrease. 
B)  excess demand will develop. 
C)  the quality of the good supplied will likely decrease. 
D)  quantity supplied will increase. 
A)  the quantity demanded will decrease. 
B)  excess demand will develop. 
C)  the quality of the good supplied will likely decrease. 
D)  quantity supplied will increase.

Question 2

Use the following to answer question 70:  
-Suppose that Canadian sheep farmers are very upset about the subsidies the UK government pays to British sheep farmers.One reason for this could be that subsidized wool from the United Kingdom:

Accepted Answer

A)  leads to wool surpluses in the United Kingdom and lower prices for Canadian farmers on world markets. 
B)  raises the world price of wool. 
C)  has led to a global shortage of wool. 
D)  has led to an increase in the demand for Canadian wool. 
A)  leads to wool surpluses in the United Kingdom and lower prices for Canadian farmers on world markets. 
B)  raises the world price of wool. 
C)  has led to a global shortage of wool. 
D)  has led to an increase in the demand for Canadian wool.

Question 3

The most likely reason that the government implements a price _____ is because it feels the price is too high for _____.

Accepted Answer

A)  ceiling;consumers 
B)  floor;consumers 
C)  ceiling;producers 
D)  floor;producers 
A)  ceiling;consumers 
B)  floor;consumers 
C)  ceiling;producers 
D)  floor;producers

Question 4

Although they cost more than $200 000 when they were issued in the 1930s,the New York taxicab medallions are relatively inexpensive today,selling for around $3 000.

Accepted Answer

A) True 
 B)False

Question 5

When the minimum wage increases,which outcome is MOST likely?

Accepted Answer

A)  Unemployment among skilled workers decreases. 
B)  Fewer workers are willing to work off the books. 
C)  Skilled workers will outnumber unskilled workers. 
D)  Unemployment among unskilled workers increases. 
A)  Unemployment among skilled workers decreases. 
B)  Fewer workers are willing to work off the books. 
C)  Skilled workers will outnumber unskilled workers. 
D)  Unemployment among unskilled workers increases.

Question 6

The system of a special numbered plate that must be affixed to the taxicab in Toronto is an example of a:

Accepted Answer

A)  price subsidy. 
B)  nonbinding price ceiling. 
C)  price floor. 
D)  quantity control. 
A)  price subsidy. 
B)  nonbinding price ceiling. 
C)  price floor. 
D)  quantity control.

Question 7

Use the following to answer questions:  
-(Table: Market for Apartments)Use Table: Market for Apartments.If a government price ceiling of $600 is imposed on this market,the result will be an inefficiency in the form of a _____ million apartments.

Accepted Answer

A)  surplus of 0.6 
B)  surplus of 0.8 
C)  shortage of 0.8 
D)  shortage of 0.6 
A)  surplus of 0.6 
B)  surplus of 0.8 
C)  shortage of 0.8 
D)  shortage of 0.6

Question 8

Use the following to answer question :  
-(Table: Quantity Supplied and Quantity Demanded)Use Table: Quantity Supplied and Quantity Demanded.The government institutes a price floor,and as a result,too many resources are allocated for the production of the good.Given this,which dollar amount is a possible value of the price floor in this market?

Accepted Answer

A)  $5 
B)  $10 
C)  $15 
D)  $20 
A)  $5 
B)  $10 
C)  $15 
D)  $20

Question 9

Black markets may develop as a result of price controls because:

Accepted Answer

A)  price controls increase efficiency. 
B)  quantity demanded equals quantity supplied at the mandated price. 
C)  price controls offer subsidies for market transactions. 
D)  individuals can profit by illegal exchanges. 
A)  price controls increase efficiency. 
B)  quantity demanded equals quantity supplied at the mandated price. 
C)  price controls offer subsidies for market transactions. 
D)  individuals can profit by illegal exchanges.

Question 10

A price ceiling will not have an 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 11

If New York City had no medallion system for taxicabs,assuming that the supply curve of taxicab rides is upward sloping and the demand curve for taxicab rides is downward sloping,economic theory would predict that the price of a taxicab ride would:

Accepted Answer

A)  increase because of the higher safety hazards. 
B)  not change from its current level. 
C)  decrease. 
D)  increase,but only slightly. 
A)  increase because of the higher safety hazards. 
B)  not change from its current level. 
C)  decrease. 
D)  increase,but only slightly.

Question 12

Which inefficiency is NOT caused by price floors?

Accepted Answer

A)  inefficiently low quality 
B)  inefficient allocation of sales among sellers 
C)  wasted resources 
D)  illegal activity 
A)  inefficiently low quality 
B)  inefficient allocation of sales among sellers 
C)  wasted resources 
D)  illegal activity

Question 13

Use the following to answer questions:
Figure: The Market for Butter  
-(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million kilograms of butter.

Accepted Answer

A)  surplus;4.5 
B)  shortage;4.5 
C)  surplus;3 
D)  shortage;1.5 
A)  surplus;4.5 
B)  shortage;4.5 
C)  surplus;3 
D)  shortage;1.5

Question 14

Government intervention in the form of binding price floors or binding price ceilings will:

Accepted Answer

A)  always enhance the efficiency of the market. 
B)  result in either surpluses or shortages. 
C)  move the market toward its equilibrium quantity more quickly. 
D)  often be seen as necessary to decrease the activity of black markets. 
A)  always enhance the efficiency of the market. 
B)  result in either surpluses or shortages. 
C)  move the market toward its equilibrium quantity more quickly. 
D)  often be seen as necessary to decrease the activity of black markets.

Question 15

Suppose that the government sets a price floor below the current price of a good.This price floor will:

Accepted Answer

A)  result in an excess supply of the good. 
B)  result in an excess demand for the good. 
C)  have no immediate effect on the price of the good. 
D)  increase the quantity supplied of the good. 
A)  result in an excess supply of the good. 
B)  result in an excess demand for the good. 
C)  have no immediate effect on the price of the good. 
D)  increase the quantity supplied of the good.

Question 16

Use the following to answer question :  
-A student organization forms on your university campus to protest the high rent for apartments near campus.This organization is planning a meeting with the dean and the president of the university.Which choice BEST describes one policy the student organization might fight for?

Accepted Answer

A)  a laissez-faire policy 
B)  a price floor 
C)  a price ceiling 
D)  a quantity control 
A)  a laissez-faire policy 
B)  a price floor 
C)  a price ceiling 
D)  a quantity control

Question 17

Use the following to answer question 73:  
-Suppose that the government sets a price floor of $2.85 per kilogram on corn when the current price is $2.55.This price floor will:

Accepted Answer

A)  cause a surplus of corn. 
B)  cause a shortage of corn. 
C)  have no immediate effect on the price of corn. 
D)  increase the supply of corn. 
A)  cause a surplus of corn. 
B)  cause a shortage of corn. 
C)  have no immediate effect on the price of corn. 
D)  increase the supply of corn.

Question 18

When the government removes a binding price floor:

Accepted Answer

A)  quantity demanded will decrease and quantity supplied will increase. 
B)  quantity demanded will increase and quantity supplied will decrease. 
C)  excess demand will develop. 
D)  excess supply will develop. 
A)  quantity demanded will decrease and quantity supplied will increase. 
B)  quantity demanded will increase and quantity supplied will decrease. 
C)  excess demand will develop. 
D)  excess supply will develop.

Question 19

In a(n)_____ market,goods or services are bought and sold illegally.

Accepted Answer

A)  black 
B)  uncontrolled 
C)  unregulated 
D)  unproductive 
A)  black 
B)  uncontrolled 
C)  unregulated 
D)  unproductive

Question 20

Use the following to answer questions:  
-(Table: Market for Banana Muffins)Use Table: Market for Banana Muffins.Suppose that the government decides to reduce banana muffin consumption as part of a war on obesity.After careful study,the government decides to impose a quota of 5 000 on production of banana muffins this year.What price will producers charge if they obey the quota law?

Accepted Answer

A)  $1.20 
B)  $1.30 
C)  $1.50 
D)  The answer cannot be determined with this information. 
A)  $1.20 
B)  $1.30 
C)  $1.50 
D)  The answer cannot be determined with this information.

Suppose that a binding price floor is in place in a particular market.If the market is deregulated and the price floor is removed:

Use the following to answer question 70: -Suppose that Canadian sheep farmers are very upset about the subsidies the UK government pays to British sheep farmers.One reason for this could be that subsidized wool from the United Kingdom:

The most likely reason that the government implements a price _ is because it feels the price is too high for _.

Although they cost more than $200 000 when they were issued in the 1930s,the New York taxicab medallions are relatively inexpensive today,selling for around $3 000.

When the minimum wage increases,which outcome is MOST likely?

The system of a special numbered plate that must be affixed to the taxicab in Toronto is an example of a:

Use the following to answer questions: -(Table: Market for Apartments)Use Table: Market for Apartments.If a government price ceiling of $600 is imposed on this market,the result will be an inefficiency in the form of a _____ million apartments.

Black markets may develop as a result of price controls because:

A price ceiling will not have an immediate effect if:

If New York City had no medallion system for taxicabs,assuming that the supply curve of taxicab rides is upward sloping and the demand curve for taxicab rides is downward sloping,economic theory would predict that the price of a taxicab ride would:

Which inefficiency is NOT caused by price floors?

Use the following to answer questions: Figure: The Market for Butter -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _ of _ million kilograms of butter.

Government intervention in the form of binding price floors or binding price ceilings will:

Suppose that the government sets a price floor below the current price of a good.This price floor will:

Use the following to answer question 73: -Suppose that the government sets a price floor of $2.85 per kilogram on corn when the current price is $2.55.This price floor will:

When the government removes a binding price floor:

In a(n)_____ market,goods or services are bought and sold illegally.

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

Suppose that a binding price floor is in place in a particular market.If the market is deregulated and the price floor is removed:

Use the following to answer question 70: -Suppose that Canadian sheep farmers are very upset about the subsidies the UK government pays to British sheep farmers.One reason for this could be that subsidized wool from the United Kingdom:

The most likely reason that the government implements a price _____ is because it feels the price is too high for _____.

Although they cost more than $200 000 when they were issued in the 1930s,the New York taxicab medallions are relatively inexpensive today,selling for around $3 000.

When the minimum wage increases,which outcome is MOST likely?

The system of a special numbered plate that must be affixed to the taxicab in Toronto is an example of a:

Use the following to answer questions: -(Table: Market for Apartments)Use Table: Market for Apartments.If a government price ceiling of $600 is imposed on this market,the result will be an inefficiency in the form of a _____ million apartments.

Black markets may develop as a result of price controls because:

A price ceiling will not have an immediate effect if:

If New York City had no medallion system for taxicabs,assuming that the supply curve of taxicab rides is upward sloping and the demand curve for taxicab rides is downward sloping,economic theory would predict that the price of a taxicab ride would:

Which inefficiency is NOT caused by price floors?

Use the following to answer questions: Figure: The Market for Butter -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _____ of _____ million kilograms of butter.

Government intervention in the form of binding price floors or binding price ceilings will:

Suppose that the government sets a price floor below the current price of a good.This price floor will:

Use the following to answer question 73: -Suppose that the government sets a price floor of $2.85 per kilogram on corn when the current price is $2.55.This price floor will:

When the government removes a binding price floor:

In a(n)_____ market,goods or services are bought and sold illegally.

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

The most likely reason that the government implements a price _ is because it feels the price is too high for _.

Use the following to answer questions: Figure: The Market for Butter -(Figure: The Market for Butter)Use Figure: The Market for Butter.If a government price floor of $1.10 is imposed on this market,an inefficiency will result in the form of a _ of _ million kilograms of butter.