Question 1

The price of milk increases.Which of the following is NOT part of the likely chain of events that follows from this price change?

Accepted Answer

A) Some milk consumers reduce their consumption of milk. 
B) Milk producers increase their production of milk. 
C) The producers of feed for dairy cows increase production. 
D) The manufacturers of milking machines lay off some workers. 
A) Some milk consumers reduce their consumption of milk. 
B) Milk producers increase their production of milk. 
C) The producers of feed for dairy cows increase production. 
D) The manufacturers of milking machines lay off some workers.

Question 2

If supply increases and demand decreases,

Accepted Answer

A) the market clearing price definitely rises,and the equilibrium quantity definitely falls. 
B) the market clearing price definitely rises,and the effect on the equilibrium quantity is indeterminate. 
C) the market clearing price definitely falls,and the effect on the equilibrium quantity is indeterminate. 
D) the effect on the market clearing price is indeterminate,and the equilibrium quantity definitely falls. 
A) the market clearing price definitely rises,and the equilibrium quantity definitely falls. 
B) the market clearing price definitely rises,and the effect on the equilibrium quantity is indeterminate. 
C) the market clearing price definitely falls,and the effect on the equilibrium quantity is indeterminate. 
D) the effect on the market clearing price is indeterminate,and the equilibrium quantity definitely falls.

Question 3

Which of the following is one of the functions of rental prices?

Accepted Answer

A) To redistribute income from landlords to renters 
B) To redistribute income from renters to landlords 
C) To signal to the local government when taxes on rental units should be increased 
D) To ration the use of existing housing for current consumers 
A) To redistribute income from landlords to renters 
B) To redistribute income from renters to landlords 
C) To signal to the local government when taxes on rental units should be increased 
D) To ration the use of existing housing for current consumers

Question 4

The minimum wage laws seek to

Accepted Answer

A) penalize employers that are not complying with labor laws. 
B) assure a minimum standard of payment for work. 
C) assure that all workers are paid the same wage rate. 
D) help teenagers find work. 
A) penalize employers that are not complying with labor laws. 
B) assure a minimum standard of payment for work. 
C) assure that all workers are paid the same wage rate. 
D) help teenagers find work.

Question 5

Federally provided agricultural subsidies in the United States have ________ with the passage of the 2002 Farm Security Act and the 2007 Food,Security,and Bioenergy Act.

Accepted Answer

A) been abolished 
B) been maintained 
C) increased to the level of EU price supports 
D) been made a function of tax revenues 
A) been abolished 
B) been maintained 
C) increased to the level of EU price supports 
D) been made a function of tax revenues

Question 6

An import quota is a limit on the

Accepted Answer

A) number of foreign workers allowed to work in a country. 
B) number of container ships allowed to enter the territorial waters of the United States. 
C) value of low-priced foreign goods that are allowed to be imported into the United States. 
D) amount of a product that may be imported. 
A) number of foreign workers allowed to work in a country. 
B) number of container ships allowed to enter the territorial waters of the United States. 
C) value of low-priced foreign goods that are allowed to be imported into the United States. 
D) amount of a product that may be imported.

Question 7

All of the following reduce the transaction costs for consumers EXCEPT

Accepted Answer

A) eBay. 
B) a shopping mall. 
C) the Supreme Court decisions regarding the Second Amendment. 
D) a grocery store. 
A) eBay. 
B) a shopping mall. 
C) the Supreme Court decisions regarding the Second Amendment. 
D) a grocery store.

Question 8

Other things being equal,suppose that the demand for wheat in constant quality units increases.The increase in demand will cause

Accepted Answer

A) a surplus of wheat. 
B) a higher equilibrium price and higher equilibrium quantity of wheat. 
C) fall in the market clearing price of corn,a substitute for wheat. 
D) a higher equilibrium quantity,but a lower equilibrium price of wheat. 
A) a surplus of wheat. 
B) a higher equilibrium price and higher equilibrium quantity of wheat. 
C) fall in the market clearing price of corn,a substitute for wheat. 
D) a higher equilibrium quantity,but a lower equilibrium price of wheat.

Question 9

A supply restriction that restricts the amount of a good that can be imported is a(n)

Accepted Answer

A) price floor. 
B) price ceiling. 
C) black market. 
D) import quota. 
A) price floor. 
B) price ceiling. 
C) black market. 
D) import quota.

Question 10

-Refer to the above figure.If a price floor of $5 was set,

Accepted Answer

A) the quantity sold would be 80 units. 
B) there would be a surplus of 40 units. 
C) there would be a shortage of 40 units. 
D) there would be a shortage of 20 units. 
A) the quantity sold would be 80 units. 
B) there would be a surplus of 40 units. 
C) there would be a shortage of 40 units. 
D) there would be a shortage of 20 units.

Question 11

One result of the agriculture price supports cited in the text is that

Accepted Answer

A) sometimes surplus food is given away. 
B) food shortages result in most cases. 
C) small farms receive most of the benefits. 
D) none of the above. 
A) sometimes surplus food is given away. 
B) food shortages result in most cases. 
C) small farms receive most of the benefits. 
D) none of the above.

Question 12

Rationing occurs for goods

Accepted Answer

A) that have a positive price. 
B) that have a zero price. 
C) that have a negative price. 
D) that are not manufactured. 
A) that have a positive price. 
B) that have a zero price. 
C) that have a negative price. 
D) that are not manufactured.

Question 13

An increase in demand and a decrease in supply will lead to an

Accepted Answer

A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and quantity. 
C) an unambiguous increase in quantity,but the effect on price is indeterminate. 
D) an unambiguous increase in price,but the effect on quantity is indeterminate. 
A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and quantity. 
C) an unambiguous increase in quantity,but the effect on price is indeterminate. 
D) an unambiguous increase in price,but the effect on quantity is indeterminate.

Question 14

Which of the following are ways to ration goods and services?

Accepted Answer

A) price 
B) physical force 
C) political power 
D) All of the above are correct. 
A) price 
B) physical force 
C) political power 
D) All of the above are correct.

Question 15

When a government imposes price controls,the result is that

Accepted Answer

A) the rationing function of prices is not allowed to function freely. 
B) the price system operates more efficiently. 
C) all trades are as mutually beneficial to each party as possible. 
D) scarcity usually disappears. 
A) the rationing function of prices is not allowed to function freely. 
B) the price system operates more efficiently. 
C) all trades are as mutually beneficial to each party as possible. 
D) scarcity usually disappears.

Question 16

Suppose local educators argue that teachers' salaries are too low.At the same time it is said that the school district received 750 applications for 5 new openings.Are salaries too low? Explain.

Accepted Answer

It is difficult to claim salaries are to

Question 17

If producers must receive a higher price to be induced to produce any quantity,we can conclude that

Accepted Answer

A) supply decreased. 
B) demand decreased. 
C) both supply and demand increased. 
D) demand increased. 
A) supply decreased. 
B) demand decreased. 
C) both supply and demand increased. 
D) demand increased.

Question 18

A newspaper headline asserts: "Rising Demand Pushes Up Housing Prices." This headline

Accepted Answer

A) incorrectly implies that the demand for housing can change,whereas in fact only the quantity of housing demanded can change. 
B) incorrectly implies that the price of housing will rise when demand increases. 
C) incorrectly implies that more housing will be demanded at higher prices. 
D) correctly implies that an increase in demand will increase the market clearing price. 
A) incorrectly implies that the demand for housing can change,whereas in fact only the quantity of housing demanded can change. 
B) incorrectly implies that the price of housing will rise when demand increases. 
C) incorrectly implies that more housing will be demanded at higher prices. 
D) correctly implies that an increase in demand will increase the market clearing price.

Question 19

Why does an economy need a rationing mechanism?

Accepted Answer

A) because of scarcity 
B) because it preserves the power of the wealthy 
C) because it eliminates poverty 
D) All of the above are correct. 
A) because of scarcity 
B) because it preserves the power of the wealthy 
C) because it eliminates poverty 
D) All of the above are correct.

Question 20

The signaling aspect of the market system refer to

Accepted Answer

A) legal requirements for contracts and exchanges. 
B) the price of the good to the consumer and producer. 
C) the voluntary character of the exchange. 
D) transaction costs of carrying out exchanges. 
A) legal requirements for contracts and exchanges. 
B) the price of the good to the consumer and producer. 
C) the voluntary character of the exchange. 
D) transaction costs of carrying out exchanges.

Exam 3: Extensions of Demand and Supply Analysis

The price of milk increases.Which of the following is NOT part of the likely chain of events that follows from this price change?

If supply increases and demand decreases,

Which of the following is one of the functions of rental prices?

The minimum wage laws seek to

Federally provided agricultural subsidies in the United States have ________ with the passage of the 2002 Farm Security Act and the 2007 Food,Security,and Bioenergy Act.

An import quota is a limit on the

All of the following reduce the transaction costs for consumers EXCEPT

Other things being equal,suppose that the demand for wheat in constant quality units increases.The increase in demand will cause

A supply restriction that restricts the amount of a good that can be imported is a(n)

-Refer to the above figure.If a price floor of $5 was set,

One result of the agriculture price supports cited in the text is that

Rationing occurs for goods

An increase in demand and a decrease in supply will lead to an

Which of the following are ways to ration goods and services?

When a government imposes price controls,the result is that

Suppose local educators argue that teachers' salaries are too low.At the same time it is said that the school district received 750 applications for 5 new openings.Are salaries too low? Explain.

If producers must receive a higher price to be induced to produce any quantity,we can conclude that

A newspaper headline asserts: "Rising Demand Pushes Up Housing Prices." This headline

Why does an economy need a rationing mechanism?

The signaling aspect of the market system refer to

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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