Question 1

When the minimum wage increases:

Accepted Answer

A)  unemployment among skilled workers decreases. 
B)  fewer workers are willing to work off the books. 
C)  employment of unskilled workers increases. 
D)  unemployment among unskilled workers increases. 
A)  unemployment among skilled workers decreases. 
B)  fewer workers are willing to work off the books. 
C)  employment of unskilled workers increases. 
D)  unemployment among unskilled workers increases.

Question 2

Price ceilings will impose costs on society because they:

Accepted Answer

A)  will eliminate long waiting lines. 
B)  may result in black market prices, which are lower than the market-determined price would be. 
C)  lead to a smaller quantity offered on the market. 
D)  help businesses instead of consumers. 
A)  will eliminate long waiting lines. 
B)  may result in black market prices, which are lower than the market-determined price would be. 
C)  lead to a smaller quantity offered on the market. 
D)  help businesses instead of consumers.

Question 3

Use the following to answer questions 
Table: Market for Apartments  
-(Table: Market for Apartments) Look at the table Market for Apartments. If a price ceiling of $900 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)  shortage of 0.6 
C)  surplus of 0.2 
D)  shortage of 0.2 
A)  surplus of 0.6 
B)  shortage of 0.6 
C)  surplus of 0.2 
D)  shortage of 0.2

Question 4

If the minimum wage is a binding price floor:

Accepted Answer

A)  those who want to work will outnumber the jobs available. 
B)  the equilibrium wage will increase. 
C)  there will be a job for everyone who is willing to work. 
D)  business owners will hire more workers. 
A)  those who want to work will outnumber the jobs available. 
B)  the equilibrium wage will increase. 
C)  there will be a job for everyone who is willing to work. 
D)  business owners will hire more workers.

Question 5

Use the following to answer questions 
Figure: Rent Controls  
-(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent1:

Accepted Answer

A)  rental apartments may be of inefficiently low quality. 
B)  there will be an efficient allocation of rentals. 
C)  some landlords may break the law by renting below the mandated price. 
D)  new apartments will be constructed. 
A)  rental apartments may be of inefficiently low quality. 
B)  there will be an efficient allocation of rentals. 
C)  some landlords may break the law by renting below the mandated price. 
D)  new apartments will be constructed.

Question 6

The difference between the demand price and the supply price at the quota limit is:

Accepted Answer

A)  the quota rent. 
B)  the rent received by landlords who own rent-controlled apartments. 
C)  the opportunity cost of using or buying a good, subject to an import quota. 
D)  usually large enough to cause a surplus. 
A)  the quota rent. 
B)  the rent received by landlords who own rent-controlled apartments. 
C)  the opportunity cost of using or buying a good, subject to an import quota. 
D)  usually large enough to cause a surplus.

Question 7

A binding price floor causes:

Accepted Answer

A)  a shortage in the market. 
B)  a surplus in the market. 
C)  wasted resources. 
D)  a surplus in the market and wasted resources. 
A)  a shortage in the market. 
B)  a surplus in the market. 
C)  wasted resources. 
D)  a surplus in the market and wasted resources.

Question 8

Which of the following is a quota?

Accepted Answer

A)  rent controls in New York City 
B)  property taxes on beachfront property in Florida 
C)  limits on the number of bushels of clams that can be caught in New Jersey 
D)  the maximum reimbursement that insurance will pay for a medical procedure 
A)  rent controls in New York City 
B)  property taxes on beachfront property in Florida 
C)  limits on the number of bushels of clams that can be caught in New Jersey 
D)  the maximum reimbursement that insurance will pay for a medical procedure

Question 9

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 10

Suppose 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 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 effect on the price of the good. 
D)  increase the quantity supplied of the good.

Question 11

Quotas are more effective than price controls because unlike price controls, quotas do not cause deadweight loss.

Accepted Answer

A) True 
 B)False

Question 12

The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound:

Accepted Answer

A)  quantity demanded will decrease. 
B)  quantity supplied will increase. 
C)  there will be a shortage of apples. 
D)  the price floor will not affect the market price or output. 
A)  quantity demanded will decrease. 
B)  quantity supplied will increase. 
C)  there will be a shortage of apples. 
D)  the price floor will not affect the market price or output.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The amount for which suppliers are willing to supply the quota limit quantity is the:

Accepted Answer

A)  demand price. 
B)  supply price. 
C)  quota rent. 
D)  price floor. 
A)  demand price. 
B)  supply price. 
C)  quota rent. 
D)  price floor.

Question 15

Suppose the state of Mississippi sets a price floor in the market for cotton. If the floor is set below the market-clearing price of cotton, the floor will cause a surplus of cotton.

Accepted Answer

A) True 
 B)False

Question 16

Which is NOT an inefficiency caused by binding price ceilings?

Accepted Answer

A)  inefficient allocation to consumers 
B)  wasted resources 
C)  illegal activity 
D)  inefficient allocation of sales among sellers 
A)  inefficient allocation to consumers 
B)  wasted resources 
C)  illegal activity 
D)  inefficient allocation of sales among sellers

Question 17

A quota is:

Accepted Answer

A)  a quantity restriction. 
B)  a price control. 
C)  a consumer surplus. 
D)  a means to combat black markets. 
A)  a quantity restriction. 
B)  a price control. 
C)  a consumer surplus. 
D)  a means to combat black markets.

Question 18

One of the ways rent control is inefficient is that it leads to:

Accepted Answer

A)  higher-quality apartments. 
B)  high opportunity costs associated with wasted time searching for apartments. 
C)  markets that maximize total surplus. 
D)  the construction of more apartments. 
A)  higher-quality apartments. 
B)  high opportunity costs associated with wasted time searching for apartments. 
C)  markets that maximize total surplus. 
D)  the construction of more apartments.

Question 19

How does a price ceiling cause deadweight loss in the market?

Accepted Answer

If a market is allowed to reach equilibr

Question 20

How could a minimum wage cause an incentive for illegal hiring practices?

Accepted Answer

A minimum wage is set above the equilibr

Exam 5: Price Controls and Quotas- Meddling With Markets

When the minimum wage increases:

Price ceilings will impose costs on society because they:

Use the following to answer questions Table: Market for Apartments -(Table: Market for Apartments) Look at the table Market for Apartments. If a price ceiling of $900 is imposed on this market, the result will be an inefficiency in the form of a _____ million apartments.

If the minimum wage is a binding price floor:

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent1:

The difference between the demand price and the supply price at the quota limit is:

A binding price floor causes:

Which of the following is a quota?

A maximum price set below the equilibrium price is a:

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

Quotas are more effective than price controls because unlike price controls, quotas do not cause deadweight loss.

The market for apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound:

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

The amount for which suppliers are willing to supply the quota limit quantity is the:

Suppose the state of Mississippi sets a price floor in the market for cotton. If the floor is set below the market-clearing price of cotton, the floor will cause a surplus of cotton.

Which is NOT an inefficiency caused by binding price ceilings?

A quota is:

One of the ways rent control is inefficient is that it leads to:

How does a price ceiling cause deadweight loss in the market?

How could a minimum wage cause an incentive for illegal hiring practices?

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

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent₁: