Question 1

A price floor will be binding only if it is set

Accepted Answer

A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price. 
A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price. B

Question 2

Figure 6-11  
-Refer to Figure 6-11.Which of the following statements is not correct?

Accepted Answer

A) A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. 
B) A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. 
C) A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. 
D) A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B. 
A) A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. 
B) A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. 
C) A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. 
D) A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B. B

Question 3

If the minimum wage exceeds the equilibrium wage,then

Accepted Answer

A) the quantity demanded of labor will exceed the quantity supplied. 
B) the quantity supplied of labor will exceed the quantity demanded. 
C) the minimum wage will not be binding. 
D) there will be no unemployment. 
A) the quantity demanded of labor will exceed the quantity supplied. 
B) the quantity supplied of labor will exceed the quantity demanded. 
C) the minimum wage will not be binding. 
D) there will be no unemployment. B

Question 4

Unlike minimum wage laws,wage subsidies

Accepted Answer

A) discourage firms from hiring the working poor. 
B) cause unemployment. 
C) help only wealthy workers. 
D) raise the living standards of the working poor without creating unemployment. 
A) discourage firms from hiring the working poor. 
B) cause unemployment. 
C) help only wealthy workers. 
D) raise the living standards of the working poor without creating unemployment.

Question 5

The goal of rent control is to

Accepted Answer

A) facilitate controlled economic experiments in urban areas. 
B) help landlords by assuring them a low vacancy rate for their apartments. 
C) help the poor by assuring them an adequate supply of apartments. 
D) help the poor by making housing more affordable. 
A) facilitate controlled economic experiments in urban areas. 
B) help landlords by assuring them a low vacancy rate for their apartments. 
C) help the poor by assuring them an adequate supply of apartments. 
D) help the poor by making housing more affordable.

Question 6

A binding price floor
(i)Causes a surplus.
(ii)Causes a shortage.
(iii)Is set at a price above the equilibrium price.
(iv)Is set at a price below the equilibrium price.

Accepted Answer

A) (i)only 
B) (iii)only 
C) (i)and (iii)only 
D) (ii)and (iv)only 
A) (i)only 
B) (iii)only 
C) (i)and (iii)only 
D) (ii)and (iv)only

Question 7

Minimum wage laws

Accepted Answer

A) may encourage some teenagers to drop out and take jobs. 
B) create labor shortages. 
C) have the greatest impact in the market for skilled labor. 
D) All of the above are correct. 
A) may encourage some teenagers to drop out and take jobs. 
B) create labor shortages. 
C) have the greatest impact in the market for skilled labor. 
D) All of the above are correct.

Question 8

Other than OPEC,the shortage of gasoline in the U.S.in the 1970s could also be blamed on

Accepted Answer

A) a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B) the government's policy of maintaining a price ceiling on gasoline. 
C) an indifference among U.S.consumers toward conservation. 
D) the lack of substitutes for crude oil. 
A) a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B) the government's policy of maintaining a price ceiling on gasoline. 
C) an indifference among U.S.consumers toward conservation. 
D) the lack of substitutes for crude oil.

Question 9

Figure 6-15  
-Refer to Figure 6-15.For a price floor to be binding in this market,it would have to be set at

Accepted Answer

A) any price below $3. 
B) a price between $2 and $3. 
C) a price between $3 and $4. 
D) any price above $3. 
A) any price below $3. 
B) a price between $2 and $3. 
C) a price between $3 and $4. 
D) any price above $3.

Question 10

Figure 6-16  
-Refer to Figure 6-16.In this market,a minimum wage of $7.25 is

Accepted Answer

A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment. 
A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment.

Question 11

Suppose that a binding rent control law is repealed in San Francisco.As a result,we would expect the total number of units rented in the city to

Accepted Answer

A) ​increase. 
B) ​decrease. 
C) ​remain unchanged. 
D) ​decrease,then increase. 
A) ​increase. 
B) ​decrease. 
C) ​remain unchanged. 
D) ​decrease,then increase.

Question 12

Under rent control,bribery is a mechanism to

Accepted Answer

A) bring the total price of an apartment (including the bribe)closer to the equilibrium price. 
B) allocate housing to the poorest individuals in the market. 
C) force the total price of an apartment (including the bribe)to be less than the market price. 
D) allocate housing to the most deserving tenants. 
A) bring the total price of an apartment (including the bribe)closer to the equilibrium price. 
B) allocate housing to the poorest individuals in the market. 
C) force the total price of an apartment (including the bribe)to be less than the market price. 
D) allocate housing to the most deserving tenants.

Question 13

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

A) price subsidy. 
B) price floor. 
C) tax. 
D) price ceiling. 
A) price subsidy. 
B) price floor. 
C) tax. 
D) price ceiling.

Question 14

Figure 6-8  
-Refer to Figure 6-8.The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A) a price ceiling of $3 is imposed. 
B) a price ceiling of $5 is imposed. 
C) a price floor of $5 is imposed. 
D) All of the above are correct. 
A) a price ceiling of $3 is imposed. 
B) a price ceiling of $5 is imposed. 
C) a price floor of $5 is imposed. 
D) All of the above are correct.

Question 15

Figure 6-16  
-Refer to Figure 6-16.In this market,a minimum wage of $2.75 is

Accepted Answer

A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment. 
A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment.

Question 16

Figure 6-4  
-Refer to Figure 6-4.A government-imposed price ceiling of $6 in this market results in

Accepted Answer

A) a shortage of 8 units. 
B) a shortage of 4 units. 
C) 14 units sold. 
D) 10 units sold. 
A) a shortage of 8 units. 
B) a shortage of 4 units. 
C) 14 units sold. 
D) 10 units sold.

Question 17

Which of the following is correct?

Accepted Answer

A) Rent control and the minimum wage are both examples of price ceilings. 
B) Rent control is an example of a price ceiling,and the minimum wage is an example of a price floor. 
C) Rent control is an example of a price floor,and the minimum wage is an example of a price ceiling. 
D) Rent control and the minimum wage are both examples of price floors. 
A) Rent control and the minimum wage are both examples of price ceilings. 
B) Rent control is an example of a price ceiling,and the minimum wage is an example of a price floor. 
C) Rent control is an example of a price floor,and the minimum wage is an example of a price ceiling. 
D) Rent control and the minimum wage are both examples of price floors.

Question 18

Figure 6-9  
-Refer to Figure 6-9.At which price would a price ceiling be nonbinding?

Accepted Answer

A) $4 
B) $5 
C) $3 
D) $7 
A) $4 
B) $5 
C) $3 
D) $7

Question 19

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13.If the government imposes a price ceiling of $4 on this market,then there will be

Accepted Answer

A) no shortage. 
B) a shortage of 5 units. 
C) a shortage of 10 units. 
D) a shortage of 20 units. 
A) no shortage. 
B) a shortage of 5 units. 
C) a shortage of 10 units. 
D) a shortage of 20 units.

Question 20

To say that a price floor is binding is to say that the price floor

Accepted Answer

A) results in a shortage. 
B) is set below the equilibrium price. 
C) causes quantity supplied to exceed quantity demanded. 
D) All of the above are correct. 
A) results in a shortage. 
B) is set below the equilibrium price. 
C) causes quantity supplied to exceed quantity demanded. 
D) All of the above are correct.

Exam 6: Supply Demand and Government Policies: Controls on Prices

A price floor will be binding only if it is set

Figure 6-11 -Refer to Figure 6-11.Which of the following statements is not correct?

If the minimum wage exceeds the equilibrium wage,then

Unlike minimum wage laws,wage subsidies

The goal of rent control is to

A binding price floor (i)Causes a surplus. (ii)Causes a shortage. (iii)Is set at a price above the equilibrium price. (iv)Is set at a price below the equilibrium price.

Minimum wage laws

Other than OPEC,the shortage of gasoline in the U.S.in the 1970s could also be blamed on

Figure 6-15 -Refer to Figure 6-15.For a price floor to be binding in this market,it would have to be set at

Figure 6-16 -Refer to Figure 6-16.In this market,a minimum wage of $7.25 is

Suppose that a binding rent control law is repealed in San Francisco.As a result,we would expect the total number of units rented in the city to

Under rent control,bribery is a mechanism to

A legal minimum on the price at which a good can be sold is called a

Figure 6-8 -Refer to Figure 6-8.The price of the good would continue to serve as the rationing mechanism if

Figure 6-16 -Refer to Figure 6-16.In this market,a minimum wage of $2.75 is

Figure 6-4 -Refer to Figure 6-4.A government-imposed price ceiling of $6 in this market results in

Which of the following is correct?

Figure 6-9 -Refer to Figure 6-9.At which price would a price ceiling be nonbinding?

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13.If the government imposes a price ceiling of $4 on this market,then there will be

To say that a price floor is binding is to say that the price floor

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A