Question 1

The American Medical Association licenses doctors. This licensing has probably led to lower earnings for doctors over time.

Accepted Answer

A) True 
 B)False

Question 2

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 3

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

Accepted Answer

A) True 
 B)False

Question 4

A binding price floor in the market for wheat:

Accepted Answer

A)  increases the price paid by consumers. 
B)  decreases the price paid by consumers. 
C)  decreases the price received by farmers. 
D)  does not change the price received by farmers. 
A)  increases the price paid by consumers. 
B)  decreases the price paid by consumers. 
C)  decreases the price received by farmers. 
D)  does not change the price received by farmers.

Question 5

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

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 6

Use the following to answer questions 
Figure: Rent Controls  
-(Figure: Rent Controls) Look at the figure Rent Controls. Without rent controls, the equilibrium rent is:

Accepted Answer

A)  Rent4. 
B)  Rent1. 
C)  Rent2. 
D)  Rent3. 
A)  Rent4. 
B)  Rent1. 
C)  Rent2. 
D)  Rent3.

Question 7

The likely result of a 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 8

The total amount of the good that can be transacted under a quantity control is called the:

Accepted Answer

A)  ceiling price. 
B)  demand price. 
C)  quota limit. 
D)  supply price. 
A)  ceiling price. 
B)  demand price. 
C)  quota limit. 
D)  supply price.

Question 9

Use the following to answer questions 
Figure: Supply and Demand in Agriculture  
-(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. If a price floor at P4 is set to help improve farm incomes and the government wants to assure farmers that their output will be purchased, the government must purchase an amount of output equal to:

Accepted Answer

A)  Q3 - Q0. 
B)  Q3 - Q1. 
C)  Q2 - Q1. 
D)  Q1 - Q3. 
A)  Q3 - Q0. 
B)  Q3 - Q1. 
C)  Q2 - Q1. 
D)  Q1 - Q3.

Question 10

Use the following to answer questions  
-(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda supplied will be:

Accepted Answer

A)  7 cans. 
B)  8 cans. 
C)  9 cans. 
D)  10 cans. 
A)  7 cans. 
B)  8 cans. 
C)  9 cans. 
D)  10 cans.

Question 11

The dictator of a small country restricts the price of cars to an amount less than or equal to $1,200 (a price below the equilibrium price for cars). Such a policy would set a:

Accepted Answer

A)  price floor. 
B)  price ceiling. 
C)  quota. 
D)  tariff. 
A)  price floor. 
B)  price ceiling. 
C)  quota. 
D)  tariff.

Question 12

An effective minimum wage ultimately means that:

Accepted Answer

A)  some unskilled workers have a difficult time finding a job. 
B)  employers must encourage workers to apply for positions. 
C)  employers will have difficulty finding enough workers for their positions. 
D)  employees are generally guaranteed employment. 
A)  some unskilled workers have a difficult time finding a job. 
B)  employers must encourage workers to apply for positions. 
C)  employers will have difficulty finding enough workers for their positions. 
D)  employees are generally guaranteed employment.

Question 13

When the government policy is to regulate the quantity of a good that can be bought and sold rather than the price at which it is transacted, it uses a:

Accepted Answer

A)  quota. 
B)  price control. 
C)  price ceiling. 
D)  price floor. 
A)  quota. 
B)  price control. 
C)  price ceiling. 
D)  price floor.

Question 14

Governments continue to impose price controls. Which of the following is NOT a valid reason for this?

Accepted Answer

A)  Some people do benefit from such price controls. 
B)  People fear that prices will change dramatically if the price controls are removed. 
C)  It is politically expedient to enact regulations that benefit influential voting groups. 
D)  Price controls are always effective. 
A)  Some people do benefit from such price controls. 
B)  People fear that prices will change dramatically if the price controls are removed. 
C)  It is politically expedient to enact regulations that benefit influential voting groups. 
D)  Price controls are always effective.

Question 15

A minimum price set above 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 16

The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus:

Accepted Answer

A)  the U.S. government typically pays farmers to produce as much as possible. 
B)  the U.S. government in some cases has destroyed the surplus production. 
C)  the European Union pays farm exporters to sell products for a profit overseas. 
D)  the U.S. government holds auctions to sell the surplus to the highest bidder. 
A)  the U.S. government typically pays farmers to produce as much as possible. 
B)  the U.S. government in some cases has destroyed the surplus production. 
C)  the European Union pays farm exporters to sell products for a profit overseas. 
D)  the U.S. government holds auctions to sell the surplus to the highest bidder.

Question 17

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

Accepted Answer

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

Question 18

Use the following to answer questions 
Figure: Rent Controls  
-(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent3:

Accepted Answer

A)  the shortage of rental units is the distance Q3 - Q1. 
B)  some renters will be willing to pay a price as high as Rent4 for Q3 units. 
C)  no one will have to pay a higher actual price than Rent0, nor will anyone be willing to do so. 
D)  rent will remain at Rent2. 
A)  the shortage of rental units is the distance Q3 - Q1. 
B)  some renters will be willing to pay a price as high as Rent4 for Q3 units. 
C)  no one will have to pay a higher actual price than Rent0, nor will anyone be willing to do so. 
D)  rent will remain at Rent2.

Question 19

If a quota is set above the equilibrium quantity, there will be:

Accepted Answer

A)  incentives for illegal activities. 
B)  missed opportunities in the form of mutually beneficial transactions that don't occur. 
C)  a supply price for the quantity transacted that will exceed the demand price of the quantity transacted. 
D)  no effect. 
A)  incentives for illegal activities. 
B)  missed opportunities in the form of mutually beneficial transactions that don't occur. 
C)  a supply price for the quantity transacted that will exceed the demand price of the quantity transacted. 
D)  no effect.

Question 20

The purpose of medallions issued in New York City in the 1930s was to:

Accepted Answer

A)  limit the number of people who used the subway during rush hour. 
B)  ensure that taxicabs met standards of safety and cleanliness. 
C)  give the owner the right to buy and sell securities on the New York Stock Exchange. 
D)  encourage citizens to buy their own cars. 
A)  limit the number of people who used the subway during rush hour. 
B)  ensure that taxicabs met standards of safety and cleanliness. 
C)  give the owner the right to buy and sell securities on the New York Stock Exchange. 
D)  encourage citizens to buy their own cars.

Exam 5: Price Controls and Quotas- Meddling With Markets

The American Medical Association licenses doctors. This licensing has probably led to lower earnings for doctors over time.

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.

A quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

A binding price floor in the market for wheat:

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. Without rent controls, the equilibrium rent is:

The likely result of a price floor is a _____ of the good at a price _____ the equilibrium price.

The total amount of the good that can be transacted under a quantity control is called the:

Use the following to answer questions -(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda supplied will be:

The dictator of a small country restricts the price of cars to an amount less than or equal to $1,200 (a price below the equilibrium price for cars). Such a policy would set a:

An effective minimum wage ultimately means that:

When the government policy is to regulate the quantity of a good that can be bought and sold rather than the price at which it is transacted, it uses a:

Governments continue to impose price controls. Which of the following is NOT a valid reason for this?

A minimum price set above the equilibrium price is a:

The United States and the European Union impose price floors on many agricultural products. These price floors lead to unwanted surpluses. To deal with a surplus:

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

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent3:

If a quota is set above the equilibrium quantity, there will be:

The purpose of medallions issued in New York City in the 1930s was to:

First Principles

Economic Models- Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Elasticity

Taxes

The Rational Consumer

International Trade

Decision Making by Individuals and Firms

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Macroeconomics- the Big Picture

Gdp and the Consumer Price Index

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Macroeconomics- Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

Toward a Fuller Understanding

Consumer Preferences and Consumer Choice

Indifference Curve Analysis of Labor Supply

Filters

The likely result of a price floor is a _ of the good at a price _ the equilibrium price.

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

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent₃: