Question 1

-According to the above figure,if the government imposes a minimum wage equal to Wm,the effect will be

Accepted Answer

A) a reduction in employment from Qe to Qm. 
B) an increase in employment from Qe to Qm. 
C) a decrease in labor supplied,from C to E. 
D) an increase in labor supplied,from A to E. 
A) a reduction in employment from Qe to Qm. 
B) an increase in employment from Qe to Qm. 
C) a decrease in labor supplied,from C to E. 
D) an increase in labor supplied,from A to E.

Question 2

-Refer to the above figure.If government sets the maximum legal price of gasoline at $2 per gallon,then the $2 limit acts as

Accepted Answer

A) a price floor. 
B) a price ceiling. 
C) an equilibrium price. 
D) a just price. 
A) a price floor. 
B) a price ceiling. 
C) an equilibrium price. 
D) a just price.

Question 3

An increase in the minimum wage will tend to cause which of the following to occur?

Accepted Answer

A) an increase in the size of the surplus of labor 
B) a leftward shift in the demand for labor 
C) a rightward shift in the supply of labor 
D) a reduction in the unemployment rate 
A) an increase in the size of the surplus of labor 
B) a leftward shift in the demand for labor 
C) a rightward shift in the supply of labor 
D) a reduction in the unemployment rate

Question 4

A price ceiling is

Accepted Answer

A) the lowest price a seller can charge for a good without losing all her customers. 
B) a legal minimum price that can be charged for a particular good or service. 
C) a legal maximum price that can be charged for a particular good or service. 
D) the lowest price a buyer can pay for a good without having to report the purchase to the government. 
A) the lowest price a seller can charge for a good without losing all her customers. 
B) a legal minimum price that can be charged for a particular good or service. 
C) a legal maximum price that can be charged for a particular good or service. 
D) the lowest price a buyer can pay for a good without having to report the purchase to the government.

Question 5

The way we know what commodities are relatively scarce or abundant is through

Accepted Answer

A) transaction costs. 
B) prices. 
C) price ceilings. 
D) price floors. 
A) transaction costs. 
B) prices. 
C) price ceilings. 
D) price floors.

Question 6

An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a

Accepted Answer

A) socialist system. 
B) communist system. 
C) queuing system. 
D) market system. 
A) socialist system. 
B) communist system. 
C) queuing system. 
D) market system.

Question 7

In which of the following situations will market clearing price decrease and the equilibrium quantity increase?

Accepted Answer

A) an increase in demand with no change in supply 
B) an increase in supply with no change in demand 
C) a decrease in supply with no change in demand 
D) a decrease in demand with no change in supply 
A) an increase in demand with no change in supply 
B) an increase in supply with no change in demand 
C) a decrease in supply with no change in demand 
D) a decrease in demand with no change in supply

Question 8

Under rent controls,

Accepted Answer

A) apartments tend to be nicer than they would be under freely competitive markets. 
B) landlord-tenant relationships are more harmonious than under freely competitive markets. 
C) the quantity demanded of rental units is less than it would be under freely competitive markets. 
D) the number of rental units available for rent is lower than under freely competitive markets. 
A) apartments tend to be nicer than they would be under freely competitive markets. 
B) landlord-tenant relationships are more harmonious than under freely competitive markets. 
C) the quantity demanded of rental units is less than it would be under freely competitive markets. 
D) the number of rental units available for rent is lower than under freely competitive markets.

Question 9

When supply increases and at the same time demand decreases,we

Accepted Answer

A) can predict that both equilibrium price and quantity will increase. 
B) can predict that both equilibrium price and quantity will decrease. 
C) cannot predict equilibrium quantity,but know that equilibrium price will decrease. 
D) cannot predict the change in either the equilibrium quantity or equilibrium price. 
A) can predict that both equilibrium price and quantity will increase. 
B) can predict that both equilibrium price and quantity will decrease. 
C) cannot predict equilibrium quantity,but know that equilibrium price will decrease. 
D) cannot predict the change in either the equilibrium quantity or equilibrium price.

Question 10

Price controls

Accepted Answer

A) do not include black markets. 
B) are another name for the price system. 
C) do not include rent controls. 
D) interfere with the rationing function of prices. 
A) do not include black markets. 
B) are another name for the price system. 
C) do not include rent controls. 
D) interfere with the rationing function of prices.

Question 11

When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price,the differences are called

Accepted Answer

A) consumer surplus. 
B) monopoly profits. 
C) opportunity cost. 
D) deadweight loss. 
A) consumer surplus. 
B) monopoly profits. 
C) opportunity cost. 
D) deadweight loss.

Question 12

Suppose the price of crude oil used to produce gasoline rises significantly.At the same time,consumers purchase hybrid cars in great numbers.In the market for gasoline,the market clearing price ________ and the equilibrium quantity ________.

Accepted Answer

A) definitely falls,is indeterminate 
B) is indeterminate,definitely falls 
C) definitely falls,definitely rises 
D) definitely rises,is indeterminate 
A) definitely falls,is indeterminate 
B) is indeterminate,definitely falls 
C) definitely falls,definitely rises 
D) definitely rises,is indeterminate

Question 13

A price ceiling represents

Accepted Answer

A) a maximum price that can be legally charged for a product or service. 
B) a minimum price that can be legally charged for a good or service. 
C) a lottery imposed upon producers by the government. 
D) a first come,first served mechanism for controlling prices. 
A) a maximum price that can be legally charged for a product or service. 
B) a minimum price that can be legally charged for a good or service. 
C) a lottery imposed upon producers by the government. 
D) a first come,first served mechanism for controlling prices.

Question 14

-Refer to the above figure.A price floor of $60 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 15

Suppose a price ceiling is currently set below the equilibrium price.Now suppose that policy makers decide to lower the price ceiling.This reduction in the price ceiling will cause which of the following to occur?

Accepted Answer

A) The shortage in the market will decrease. 
B) The shortage in the market will increase. 
C) The surplus in the market will decrease. 
D) The surplus in the market will increase. 
A) The shortage in the market will decrease. 
B) The shortage in the market will increase. 
C) The surplus in the market will decrease. 
D) The surplus in the market will increase.

Question 16

Which of the following will likely occur when price floors in agriculture are implemented?

Accepted Answer

A) Quantity supplied will exceed quantity demanded. 
B) Quantity demanded will exceed quantity supplied. 
C) Farmland will be underutilized. 
D) Supply will decrease. 
A) Quantity supplied will exceed quantity demanded. 
B) Quantity demanded will exceed quantity supplied. 
C) Farmland will be underutilized. 
D) Supply will decrease.

Question 17

When rent controls establish a legal maximum rental rate below the equilibrium rental rate,

Accepted Answer

A) quantity demanded exceeds quantity supplied. 
B) quantity supplied exceeds quantity demanded. 
C) demand exceeds supply. 
D) supply exceeds demand. 
A) quantity demanded exceeds quantity supplied. 
B) quantity supplied exceeds quantity demanded. 
C) demand exceeds supply. 
D) supply exceeds demand.

Question 18

The total amount of consumer surplus and producer surplus is at its maximum when

Accepted Answer

A) consumers and producers are allowed to trade at the market clearing price. 
B) the government imposes a price floor that is higher than the market clearing price. 
C) the government imposes a price ceiling that is lower than the market clearing price. 
D) free market exchanges do not exist. 
A) consumers and producers are allowed to trade at the market clearing price. 
B) the government imposes a price floor that is higher than the market clearing price. 
C) the government imposes a price ceiling that is lower than the market clearing price. 
D) free market exchanges do not exist.

Question 19

Which of the following statements is NOT true about the rationing of goods?

Accepted Answer

A) Goods can only be rationed by price. 
B) Goods can be rationed on a first come first serve basis. 
C) Goods can be rationed by random. 
D) Goods can be rationed by the use of coupons. 
A) Goods can only be rationed by price. 
B) Goods can be rationed on a first come first serve basis. 
C) Goods can be rationed by random. 
D) Goods can be rationed by the use of coupons.

Question 20

Suppose the price of lumber decreases.In the market for new homes,we would expect which of the following to occur?

Accepted Answer

A) the market clearing price will fall and the equilibrium quantity will rise. 
B) the market clearing price will rise and the equilibrium quantity will fall. 
C) both the market clearing price and the equilibrium quantity will fall. 
D) both the market clearing price and the equilibrium quantity will rise. 
A) the market clearing price will fall and the equilibrium quantity will rise. 
B) the market clearing price will rise and the equilibrium quantity will fall. 
C) both the market clearing price and the equilibrium quantity will fall. 
D) both the market clearing price and the equilibrium quantity will rise.

Exam 3: Extensions of Demand and Supply Analysis

-According to the above figure,if the government imposes a minimum wage equal to Wm,the effect will be

-Refer to the above figure.If government sets the maximum legal price of gasoline at $2 per gallon,then the $2 limit acts as

An increase in the minimum wage will tend to cause which of the following to occur?

A price ceiling is

The way we know what commodities are relatively scarce or abundant is through

An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a

In which of the following situations will market clearing price decrease and the equilibrium quantity increase?

Under rent controls,

When supply increases and at the same time demand decreases,we

Price controls

When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price,the differences are called

Suppose the price of crude oil used to produce gasoline rises significantly.At the same time,consumers purchase hybrid cars in great numbers.In the market for gasoline,the market clearing price ________ and the equilibrium quantity ________.

A price ceiling represents

-Refer to the above figure.A price floor of $60 results in

Suppose a price ceiling is currently set below the equilibrium price.Now suppose that policy makers decide to lower the price ceiling.This reduction in the price ceiling will cause which of the following to occur?

Which of the following will likely occur when price floors in agriculture are implemented?

When rent controls establish a legal maximum rental rate below the equilibrium rental rate,

The total amount of consumer surplus and producer surplus is at its maximum when

Which of the following statements is NOT true about the rationing of goods?

Suppose the price of lumber decreases.In the market for new homes,we would expect which of the following to occur?

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

Filters

Suppose the price of crude oil used to produce gasoline rises significantly.At the same time,consumers purchase hybrid cars in great numbers.In the market for gasoline,the market clearing price and the equilibrium quantity .