Question 1

-Refer to the above figure.A shortage occurs if the government imposes

Accepted Answer

A) a price floor at $60. 
B) a price floor at $20. 
C) a price ceiling at $60. 
D) a price ceiling at $20. 
A) a price floor at $60. 
B) a price floor at $20. 
C) a price ceiling at $60. 
D) a price ceiling at $20.

Question 2

The textbook suggests that rent controls

Accepted Answer

A) actually contribute to the housing boom in an area where they are applied. 
B) actually contribute to the housing shortage in the area where they are applied. 
C) are used in a government kickback scheme. 
D) have no effect on the local housing market. 
A) actually contribute to the housing boom in an area where they are applied. 
B) actually contribute to the housing shortage in the area where they are applied. 
C) are used in a government kickback scheme. 
D) have no effect on the local housing market.

Question 3

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 4

Suppose the price of cheese rises.In the market for pizza,one would expect that

Accepted Answer

A) the supply of pizza would increase,and the price would fall. 
B) the demand for pizza would increase,and the price would increase. 
C) the demand for pizza would decrease,and price would fall. 
D) the supply of pizza would decrease,and price would rise. 
A) the supply of pizza would increase,and the price would fall. 
B) the demand for pizza would increase,and the price would increase. 
C) the demand for pizza would decrease,and price would fall. 
D) the supply of pizza would decrease,and price would rise.

Question 5

If the government imposes a price floor that is higher than the market clearing price,then

Accepted Answer

A) consumer surplus will increase while producer surplus will decrease. 
B) consumer surplus will decrease while producer surplus will increase. 
C) both consumer surplus and producer surplus will decrease. 
D) both consumer surplus and producer surplus will increase. 
A) consumer surplus will increase while producer surplus will decrease. 
B) consumer surplus will decrease while producer surplus will increase. 
C) both consumer surplus and producer surplus will decrease. 
D) both consumer surplus and producer surplus will increase.

Question 6

The price system

Accepted Answer

A) is the voluntary exchange system used in the United States. 
B) is old fashioned and is no longer used. 
C) is used only in countries that are developing. 
D) is used to set resource prices only. 
A) is the voluntary exchange system used in the United States. 
B) is old fashioned and is no longer used. 
C) is used only in countries that are developing. 
D) is used to set resource prices only.

Question 7

-Refer to the above figure.If the government imposes a price ceiling of $20,

Accepted Answer

A) the quantity of goods that will be traded is 100. 
B) the quantity of goods that will be traded is 200. 
C) the quantity of goods that will be traded is 150. 
D) the quantity of goods that will be traded is 0. 
A) the quantity of goods that will be traded is 100. 
B) the quantity of goods that will be traded is 200. 
C) the quantity of goods that will be traded is 150. 
D) the quantity of goods that will be traded is 0.

Question 8

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

Accepted Answer

A) There would be a surplus of bread. 
B) There would be a shortage of bread. 
C) The supply of bread would increase. 
D) The supply of bread would decrease. 
A) There would be a surplus of bread. 
B) There would be a shortage of bread. 
C) The supply of bread would increase. 
D) The supply of bread would decrease.

Question 9

Total consumer surplus in a market is measured as the

Accepted Answer

A) area bounded above the market clearing price and beneath the market demand curve. 
B) area bounded below the market clearing price and above the market supply curve. 
C) vertical distance from the horizontal (quantity)axis to the market clearing price. 
D) horizontal distance from the vertical (price)axis to the equilibrium quantity. 
A) area bounded above the market clearing price and beneath the market demand curve. 
B) area bounded below the market clearing price and above the market supply curve. 
C) vertical distance from the horizontal (quantity)axis to the market clearing price. 
D) horizontal distance from the vertical (price)axis to the equilibrium quantity.

Question 10

-Refer to the above figure.A price ceiling of $20 results in

Accepted Answer

A) a shortage of 100 units. 
B) a shortage of 200 units. 
C) a surplus of 100 units. 
D) a surplus of 200 units. 
A) a shortage of 100 units. 
B) a shortage of 200 units. 
C) a surplus of 100 units. 
D) a surplus of 200 units.

Question 11

Many economists estimate that for every 10 % increase in relative minimum wage rates,there is a corresponding decrease in employment of those affected equal to

Accepted Answer

A) 5-10 %. 
B) 1-2 %. 
C) 10-20 %. 
D) 30-40 %. 
A) 5-10 %. 
B) 1-2 %. 
C) 10-20 %. 
D) 30-40 %.

Question 12

Suppose the equilibrium quantity of ethanol has decreased.Which of the following could have caused this change?

Accepted Answer

A) a decrease in demand 
B) an increase in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied 
A) a decrease in demand 
B) an increase in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied

Question 13

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Accepted Answer

A) create a shortage of agricultural products. 
B) result in the quantity of these products supplied exceeding the quantity demanded at the floor price. 
C) benefit taxpayers,who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price. 
D) benefit consumers,who are willing and able to purchase more agricultural products at the floor price. 
A) create a shortage of agricultural products. 
B) result in the quantity of these products supplied exceeding the quantity demanded at the floor price. 
C) benefit taxpayers,who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price. 
D) benefit consumers,who are willing and able to purchase more agricultural products at the floor price.

Question 14

Explain how agricultural price supports work and what the effects of the supports are.

Accepted Answer

Under agricultural price supports,the go

Question 15

An unexpected import restriction imposed on mangoes by the USDA

Accepted Answer

A) will reduce the price of mangoes in the United States. 
B) will increase the price of mangoes in the United States. 
C) will discourage American producers of mangoes. 
D) will reduce the price of mango juice in the United States. 
A) will reduce the price of mangoes in the United States. 
B) will increase the price of mangoes in the United States. 
C) will discourage American producers of mangoes. 
D) will reduce the price of mango juice in the United States.

Question 16

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Accepted Answer

A) 10-20 % 
B) 20-30 % 
C) 40-50 % 
D) 75-80 % 
A) 10-20 % 
B) 20-30 % 
C) 40-50 % 
D) 75-80 %

Question 17

An import quota for sugar results in an increase in

Accepted Answer

A) the domestic market price of sugar. 
B) the domestic demand for sugar. 
C) the domestic market supply of sugar. 
D) sugar imports. 
A) the domestic market price of sugar. 
B) the domestic demand for sugar. 
C) the domestic market supply of sugar. 
D) sugar imports.

Question 18

During the Winter Olympics in Vancouver,some residents rented rooms to visitors.This behavior

Accepted Answer

A) helped reduce the shortage of hotel rooms caused by the high demand during the Olympics. 
B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes. 
C) hurt the hotel market in Vancouver in the long run because new hotels that should have been built were not built for the Olympics. 
D) raised the demand for hotel rooms in Vancouver and should have been prevented by the city of Vancouver. 
A) helped reduce the shortage of hotel rooms caused by the high demand during the Olympics. 
B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes. 
C) hurt the hotel market in Vancouver in the long run because new hotels that should have been built were not built for the Olympics. 
D) raised the demand for hotel rooms in Vancouver and should have been prevented by the city of Vancouver.

Question 19

Holding demand constant,a reduction in supply leads to

Accepted Answer

A) lower prices and higher quantity demanded. 
B) lower prices and lower quantity demanded. 
C) higher prices and higher quantity demanded. 
D) higher prices and lower quantity demanded. 
A) lower prices and higher quantity demanded. 
B) lower prices and lower quantity demanded. 
C) higher prices and higher quantity demanded. 
D) higher prices and lower quantity demanded.

Question 20

Which of the following is NOT a device to reduce transaction costs?

Accepted Answer

A) Shopping centers 
B) Auto dealers located close together 
C) Government prohibitions on advertising 
D) Banks that direct funds from savers to borrowers 
A) Shopping centers 
B) Auto dealers located close together 
C) Government prohibitions on advertising 
D) Banks that direct funds from savers to borrowers

Exam 3: Extensions of Demand and Supply Analysis

-Refer to the above figure.A shortage occurs if the government imposes

The textbook suggests that rent controls

A price floor that is set above market equilibrium will cause

Suppose the price of cheese rises.In the market for pizza,one would expect that

If the government imposes a price floor that is higher than the market clearing price,then

The price system

-Refer to the above figure.If the government imposes a price ceiling of $20,

What would happen in the market for bread if its demand increased but the price was NOT allowed to change?

Total consumer surplus in a market is measured as the

-Refer to the above figure.A price ceiling of $20 results in

Many economists estimate that for every 10 % increase in relative minimum wage rates,there is a corresponding decrease in employment of those affected equal to

Suppose the equilibrium quantity of ethanol has decreased.Which of the following could have caused this change?

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Explain how agricultural price supports work and what the effects of the supports are.

An unexpected import restriction imposed on mangoes by the USDA

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

An import quota for sugar results in an increase in

During the Winter Olympics in Vancouver,some residents rented rooms to visitors.This behavior

Holding demand constant,a reduction in supply leads to

Which of the following is NOT a device to reduce transaction costs?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

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

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