Question 1

To dispose of the unwanted surplus resulting from agricultural price floors,the European Union pays exporters to sell products at a loss overseas.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that the federal government imposes a price ceiling of $5 per ATM transaction.If the average market-clearing price for an ATM transaction is $2,the price ceiling will not be binding in this instance.

Accepted Answer

A) True 
 B)False

Question 3

A price floor or a price ceiling is an example of:

Accepted Answer

A)  a quantity control. 
B)  a price control. 
C)  market equilibrium price. 
D)  a quota. 
A)  a quantity control. 
B)  a price control. 
C)  market equilibrium price. 
D)  a quota.

Question 4

Use the following to answer question 90:
Figure: The Shrimp Market  
-The likely result of a binding price floor is a _____ of the good at a price _____ the equilibrium price.

Accepted Answer

A)  surplus;above 
B)  shortage;below 
C)  surplus;below 
D)  shortage;above 
A)  surplus;above 
B)  shortage;below 
C)  surplus;below 
D)  shortage;above

Question 5

An effective price floor would result in a(n):

Accepted Answer

A)  surplus of the good. 
B)  shortage of the good. 
C)  quantity control. 
D)  equilibrium price. 
A)  surplus of the good. 
B)  shortage of the good. 
C)  quantity control. 
D)  equilibrium price.

Question 6

Use the following to answer questions :
Figure: The Shrimp Market  
-(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government imposes a quota limiting sales of shrimp to 250 kilograms,it will have the same effect on transactions as a price floor of:

Accepted Answer

A)  $17.50. 
B)  $10. 
C)  $7.50. 
D)  The answer cannot be determined from the information provided. 
A)  $17.50. 
B)  $10. 
C)  $7.50. 
D)  The answer cannot be determined from the information provided.

Question 7

Economists in general agree that rent controls are:

Accepted Answer

A)  an efficient and equitable way to help low-income families. 
B)  an inefficient but sometimes effective way to help low-income families. 
C)  an efficient method of dealing with the shortages caused by price ceilings. 
D)  the only way to solve the problem of poverty. 
A)  an efficient and equitable way to help low-income families. 
B)  an inefficient but sometimes effective way to help low-income families. 
C)  an efficient method of dealing with the shortages caused by price ceilings. 
D)  the only way to solve the problem of poverty.

Question 8

Use the following to answer questions :
Figure: Market I  
-(Figure: Market I)Use Figure: Market I.A surplus of the good will result if the price is:

Accepted Answer

A)  $15. 
B)  $9. 
C)  $6. 
D)  $0. 
A)  $15. 
B)  $9. 
C)  $6. 
D)  $0.

Question 9

Use the following to answer question 97:  
-(Figure: The Market for Spanish Textbooks)Use Figure: The Market for Spanish Textbooks.Suppose that the government believes the producers of Spanish textbooks are not profitable,and it wants to make sure textbook producers are profitable.It could impose a control called a price _____,and for it to be binding,one possible price would be _____.

Accepted Answer

A)  floor;$90 
B)  floor;$40 
C)  ceiling;$40 
D)  ceiling;$90 
A)  floor;$90 
B)  floor;$40 
C)  ceiling;$40 
D)  ceiling;$90

Question 10

A binding price floor is likely to cause deadweight loss because:

Accepted Answer

A)  buyers incur additional search costs looking for the scarce good. 
B)  the quantity of the good transacted is less than the equilibrium quantity transacted. 
C)  a black market emerges and the good sells at prices above the price floor. 
D)  some buyers who want to buy at the controlled price are unable to find a seller willing to sell at that price. 
A)  buyers incur additional search costs looking for the scarce good. 
B)  the quantity of the good transacted is less than the equilibrium quantity transacted. 
C)  a black market emerges and the good sells at prices above the price floor. 
D)  some buyers who want to buy at the controlled price are unable to find a seller willing to sell at that price.

Question 11

The difference between the demand price and the supply price at the quota limit amount is the:

Accepted Answer

A)  demand price. 
B)  supply price. 
C)  quota rent. 
D)  price floor. 
A)  demand price. 
B)  supply price. 
C)  quota rent. 
D)  price floor.

Question 12

Suppose that Canada removes its sugar quotas and the market price of sugar drops.Since sugar is an input in candy,in the candy bar market,we would expect consumer surplus to:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  Consumer surplus cannot be determined without information about the size of the quota. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  Consumer surplus cannot be determined without information about the size of the quota.

Question 13

A rent ceiling must be set above the equilibrium rent to be binding.

Accepted Answer

A) True 
 B)False

Question 14

Which statement(s)is/are TRUE? I.Quantity controls set below the market equilibrium quantity drive a wedge between the demand price and the supply price of the good.
II.The difference between the demand price and the supply price at the quota limit is consumer surplus.
III.Quantity controls have no undesirable side effects.

Accepted Answer

A)  I only 
B)  II only 
C)  II and III 
D)  I,II,and III 
A)  I only 
B)  II only 
C)  II and III 
D)  I,II,and III

Question 15

Which inefficiency is NOT caused by binding price ceilings?

Accepted Answer

A)  inefficient allocation to consumers 
B)  wasted resources 
C)  potential illegal activity 
D)  inefficient allocation of sales among sellers 
A)  inefficient allocation to consumers 
B)  wasted resources 
C)  potential illegal activity 
D)  inefficient allocation of sales among sellers

To dispose of the unwanted surplus resulting from agricultural price floors,the European Union pays exporters to sell products at a loss overseas.

Suppose that the federal government imposes a price ceiling of $5 per ATM transaction.If the average market-clearing price for an ATM transaction is $2,the price ceiling will not be binding in this instance.

A price floor or a price ceiling is an example of:

Use the following to answer question 90: Figure: The Shrimp Market -The likely result of a binding price floor is a _ of the good at a price _ the equilibrium price.

An effective price floor would result in a(n):

Use the following to answer questions : Figure: The Shrimp Market -(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government imposes a quota limiting sales of shrimp to 250 kilograms,it will have the same effect on transactions as a price floor of:

Economists in general agree that rent controls are:

Use the following to answer questions : Figure: Market I -(Figure: Market I)Use Figure: Market I.A surplus of the good will result if the price is:

A binding price floor is likely to cause deadweight loss because:

The difference between the demand price and the supply price at the quota limit amount is the:

Suppose that Canada removes its sugar quotas and the market price of sugar drops.Since sugar is an input in candy,in the candy bar market,we would expect consumer surplus to:

A rent ceiling must be set above the equilibrium rent to be binding.

Which inefficiency is NOT caused by binding price ceilings?

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 5: Price Controls and Quotas

To dispose of the unwanted surplus resulting from agricultural price floors,the European Union pays exporters to sell products at a loss overseas.

Suppose that the federal government imposes a price ceiling of $5 per ATM transaction.If the average market-clearing price for an ATM transaction is $2,the price ceiling will not be binding in this instance.

A price floor or a price ceiling is an example of:

Use the following to answer question 90: Figure: The Shrimp Market -The likely result of a binding price floor is a _____ of the good at a price _____ the equilibrium price.

An effective price floor would result in a(n):

Use the following to answer questions : Figure: The Shrimp Market -(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government imposes a quota limiting sales of shrimp to 250 kilograms,it will have the same effect on transactions as a price floor of:

Economists in general agree that rent controls are:

Use the following to answer questions : Figure: Market I -(Figure: Market I)Use Figure: Market I.A surplus of the good will result if the price is:

A binding price floor is likely to cause deadweight loss because:

The difference between the demand price and the supply price at the quota limit amount is the:

Suppose that Canada removes its sugar quotas and the market price of sugar drops.Since sugar is an input in candy,in the candy bar market,we would expect consumer surplus to:

A rent ceiling must be set above the equilibrium rent to be binding.

Which inefficiency is NOT caused by binding price ceilings?

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Use the following to answer question 90: Figure: The Shrimp Market -The likely result of a binding price floor is a _ of the good at a price _ the equilibrium price.