Question 1

Under rent controls,

Accepted Answer

A) there is a shortage of rental units. 
B) the quantity supplied of rental units is greater than it would be under freely competitive markets. 
C) there is less government involvement in rental markets overall because there is a better supply of low-income housing. 
D) all renters are better off than under freely competitive markets. 
A) there is a shortage of rental units. 
B) the quantity supplied of rental units is greater than it would be under freely competitive markets. 
C) there is less government involvement in rental markets overall because there is a better supply of low-income housing. 
D) all renters are better off than under freely competitive markets.

Question 2

Who is most likely to benefit from rent controls?

Accepted Answer

A) Consumers who are able to obtain apartments at the controlled rents 
B) Consumers who are unable to obtain apartments at the controlled rents 
C) Landowners who can lease the apartments at the controlled rents 
D) The government that controls the rents 
A) Consumers who are able to obtain apartments at the controlled rents 
B) Consumers who are unable to obtain apartments at the controlled rents 
C) Landowners who can lease the apartments at the controlled rents 
D) The government that controls the rents

Question 3

In a world of scarcity,there has to be some way to ration the available resources.According to economists,the most efficient use of available resources occurs when rationing occurs via

Accepted Answer

A) queuing. 
B) lotteries. 
C) political power. 
D) the price system. 
A) queuing. 
B) lotteries. 
C) political power. 
D) the price system.

Question 4

With respect to the market clearing price and the equilibrium quantity for good X,an increase in the demand for and a decrease in supply of the good definitely will

Accepted Answer

A) increase the market clearing price and the equilibrium quantity of good X. 
B) decrease the market clearing price and the equilibrium quantity of good X. 
C) increase the market clearing price of good X but lower the equilibrium quantity of X. 
D) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X. 
A) increase the market clearing price and the equilibrium quantity of good X. 
B) decrease the market clearing price and the equilibrium quantity of good X. 
C) increase the market clearing price of good X but lower the equilibrium quantity of X. 
D) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.

Question 5

A price floor 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 6

The signals in markets are determined

Accepted Answer

A) by supply and demand. 
B) for all goods by the government through the use of price controls. 
C) in an unfair manner that ends up hurting the poor. 
D) by nonprice rationing devices. 
A) by supply and demand. 
B) for all goods by the government through the use of price controls. 
C) in an unfair manner that ends up hurting the poor. 
D) by nonprice rationing devices.

Question 7

Suppose a hurricane causes a great deal of destruction in Florida.After the hurricane,it takes much longer than usual for the reconstruction to take place.A possible explanation for this is

Accepted Answer

A) greed by suppliers of construction materials increased. 
B) government prevented price gouging during the reconstruction period. 
C) prices of construction materials fell in the Midwest. 
D) environmental restrictions on lumbering in the Pacific Northwest were relaxed. 
A) greed by suppliers of construction materials increased. 
B) government prevented price gouging during the reconstruction period. 
C) prices of construction materials fell in the Midwest. 
D) environmental restrictions on lumbering in the Pacific Northwest were relaxed.

Question 8

Chocolate has just been found to increase your expected life span by 5 years if you eat it every day.In the market for chocolate,this information will lead to

Accepted Answer

A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity. 
A) an increase in price and a decrease in quantity. 
B) an increase in price and an increase in quantity. 
C) a decrease in price and a decrease in quantity. 
D) a decrease in price and an increase in quantity.

Question 9

In a market,the rationing function of prices results in

Accepted Answer

A) long queues or waiting lines. 
B) a price ceiling. 
C) equilibrium. 
D) a shortage or surplus. 
A) long queues or waiting lines. 
B) a price ceiling. 
C) equilibrium. 
D) a shortage or surplus.

Question 10

An example of a black market is

Accepted Answer

A) a retail market. 
B) a discount market. 
C) scalping. 
D) barter. 
A) a retail market. 
B) a discount market. 
C) scalping. 
D) barter.

Question 11

A long line at the campus bookstore at the beginning of the term is an example of

Accepted Answer

A) price rationing. 
B) an ineffective price ceiling. 
C) a non-price rationing device. 
D) an ineffective price floor. 
A) price rationing. 
B) an ineffective price ceiling. 
C) a non-price rationing device. 
D) an ineffective price floor.

Question 12

Rent controls are

Accepted Answer

A) when rents are set above the market clearing level to aid landlords. 
B) used to provide incentives to contractors to build new apartments. 
C) used to generate revenue for the local government. 
D) when rents are set below the market clearing level. 
A) when rents are set above the market clearing level to aid landlords. 
B) used to provide incentives to contractors to build new apartments. 
C) used to generate revenue for the local government. 
D) when rents are set below the market clearing level.

Question 13

Which group of individuals most likely benefits from rent controls?

Accepted Answer

A) the unemployed who fail to obtain rental housing 
B) low-income wage earners who fail to obtain rental housing 
C) single parent families without savings or other financial assets who fail to obtain rental housing 
D) upper-income professionals who rent apartments at the price ceiling rate 
A) the unemployed who fail to obtain rental housing 
B) low-income wage earners who fail to obtain rental housing 
C) single parent families without savings or other financial assets who fail to obtain rental housing 
D) upper-income professionals who rent apartments at the price ceiling rate

Question 14

A price ceiling established below the market clearing price will usually cause

Accepted Answer

A) nonprice rationing. 
B) an excess supply. 
C) no change in the market clearing price. 
D) a decrease in the market clearing price. 
A) nonprice rationing. 
B) an excess supply. 
C) no change in the market clearing price. 
D) a decrease in the market clearing price.

Question 15

Which of the following is NOT an example of a transaction cost?

Accepted Answer

A) The enjoyment of owning the good. 
B) The opportunity cost of time spent looking for stores that sold the good desired. 
C) The cost of returning a defective product. 
D) Time spent bargaining over the price of a good. 
A) The enjoyment of owning the good. 
B) The opportunity cost of time spent looking for stores that sold the good desired. 
C) The cost of returning a defective product. 
D) Time spent bargaining over the price of a good.

Question 16

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York.The game was sold out and some fans could not get tickets.This suggests that

Accepted Answer

A) selling price was below equilibrium price. 
B) selling price was above equilibrium price. 
C) selling price was at equilibrium. 
D) the game was advertised too heavily. 
A) selling price was below equilibrium price. 
B) selling price was above equilibrium price. 
C) selling price was at equilibrium. 
D) the game was advertised too heavily.

Question 17

Which of the following is an example of a price ceiling?

Accepted Answer

A) The minimum wage 
B) Agricultural price supports 
C) Rent controls 
D) None of the above is correct 
A) The minimum wage 
B) Agricultural price supports 
C) Rent controls 
D) None of the above is correct

Question 18

An increase in supply causes

Accepted Answer

A) quantity supplied to decrease. 
B) supply and price to increase. 
C) price to decrease. 
D) price to increase. 
A) quantity supplied to decrease. 
B) supply and price to increase. 
C) price to decrease. 
D) price to increase.

Question 19

Which of the following will cause,other things being equal,a movement along the supply curve for LED televisions?

Accepted Answer

A) An improvement in the technology of producing LED televisions. 
B) An increase in resource costs for producing LED televisions. 
C) A reduction in the price of LED televisions. 
D) An expectation that the price of LED televisions will be lower in the future. 
A) An improvement in the technology of producing LED televisions. 
B) An increase in resource costs for producing LED televisions. 
C) A reduction in the price of LED televisions. 
D) An expectation that the price of LED televisions will be lower in the future.

Question 20

In a market system,the costs associated with exchanging goods are known as

Accepted Answer

A) voluntary costs. 
B) signaling costs. 
C) wholesale costs. 
D) transaction costs. 
A) voluntary costs. 
B) signaling costs. 
C) wholesale costs. 
D) transaction costs.

Exam 3: Extensions of Demand and Supply Analysis

Under rent controls,

Who is most likely to benefit from rent controls?

In a world of scarcity,there has to be some way to ration the available resources.According to economists,the most efficient use of available resources occurs when rationing occurs via

With respect to the market clearing price and the equilibrium quantity for good X,an increase in the demand for and a decrease in supply of the good definitely will

A price floor represents

The signals in markets are determined

Suppose a hurricane causes a great deal of destruction in Florida.After the hurricane,it takes much longer than usual for the reconstruction to take place.A possible explanation for this is

Chocolate has just been found to increase your expected life span by 5 years if you eat it every day.In the market for chocolate,this information will lead to

In a market,the rationing function of prices results in

An example of a black market is

A long line at the campus bookstore at the beginning of the term is an example of

Rent controls are

Which group of individuals most likely benefits from rent controls?

A price ceiling established below the market clearing price will usually cause

Which of the following is NOT an example of a transaction cost?

Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York.The game was sold out and some fans could not get tickets.This suggests that

Which of the following is an example of a price ceiling?

An increase in supply causes

Which of the following will cause,other things being equal,a movement along the supply curve for LED televisions?

In a market system,the costs associated with exchanging goods are known as

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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