Question 1

Price controls

Accepted Answer

A)  exist when firms decide that they want to charge a higher price for their product. 
B)  exist when consumers boycott a product. 
C)  are government-mandated minimum or maximum prices that may be charged for goods. 
D)  are the benefit of discount stores like Sam's Club. 
A)  exist when firms decide that they want to charge a higher price for their product. 
B)  exist when consumers boycott a product. 
C)  are government-mandated minimum or maximum prices that may be charged for goods. 
D)  are the benefit of discount stores like Sam's Club.

Question 2

In the price system

Accepted Answer

A)  prices are set by government action. 
B)  consumers alone set the price. 
C)  producers alone set the price. 
D)  prices are set by the interaction of supply and demand. 
A)  prices are set by government action. 
B)  consumers alone set the price. 
C)  producers alone set the price. 
D)  prices are set by the interaction of supply and demand.

Question 3

A technological advancement has just occurred in the phone camera industry. In the computer chip market this 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 4

-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 5

What would happen in the market for rice if its demand increased but the price was NOT allowed to change?

Accepted Answer

A)  There would be a surplus of rice. 
B)  There would be a shortage of rice. 
C)  The supply of rice would increase. 
D)  The supply of rice would decrease. 
A)  There would be a surplus of rice. 
B)  There would be a shortage of rice. 
C)  The supply of rice would increase. 
D)  The supply of rice would decrease.

Question 6

-A black market may occur when

Accepted Answer

A)  the government imposes a price floor below the market clearing price. 
B)  the government imposes a price ceiling below the market clearing price. 
C)  the government imposes a price ceiling above the market clearing price. 
D)  the government does not impose either a price ceiling or a price floor. 
A)  the government imposes a price floor below the market clearing price. 
B)  the government imposes a price ceiling below the market clearing price. 
C)  the government imposes a price ceiling above the market clearing price. 
D)  the government does not impose either a price ceiling or a price floor.

Question 7

Hospitals announce that there are not enough nurses available to keep them fully staffed. Economically speaking, what does this announcement mean?

Accepted Answer

A)  The market wage for trained nurses is currently above the equilibrium wage. 
B)  There is currently a surplus of nurses in this market. 
C)  The market wage for nurses will eventually rise to the market clearing wage. 
D)  The market will adjust very rapidly to correct this imbalance because anyone can be a nurse without any training. 
A)  The market wage for trained nurses is currently above the equilibrium wage. 
B)  There is currently a surplus of nurses in this market. 
C)  The market wage for nurses will eventually rise to the market clearing wage. 
D)  The market will adjust very rapidly to correct this imbalance because anyone can be a nurse without any training.

Question 8

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Accepted Answer

A)  10-20% 
B)  20-30% 
C)  40-50% 
D)  75-80% 
A)  10-20% 
B)  20-30% 
C)  40-50% 
D)  75-80%

Question 9

Intermediaries, known as middlemen, specialize in

Accepted Answer

A)  reducing transaction costs. 
B)  negotiating high prices for sellers. 
C)  negotiating low prices for buyers. 
D)  encouraging consumers to buy goods on credit, rather than with cash. 
A)  reducing transaction costs. 
B)  negotiating high prices for sellers. 
C)  negotiating low prices for buyers. 
D)  encouraging consumers to buy goods on credit, rather than with cash.

Question 10

Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?

Accepted Answer

For price to fall, either demand had to

Question 11

If the demand for a product falls and the supply stays the same

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.

Question 12

Which of the following is NOT a voluntary exchange?

Accepted Answer

A)  Jose loses his smartphone on the way home. 
B)  Marie buys groceries. 
C)  Jason pays $20,000 for tuition and fees this semester. 
D)  Emily buys a $500 plane ticket to fly from Miami to Dallas on short notice. 
A)  Jose loses his smartphone on the way home. 
B)  Marie buys groceries. 
C)  Jason pays $20,000 for tuition and fees this semester. 
D)  Emily buys a $500 plane ticket to fly from Miami to Dallas on short notice.

Question 13

List prices on new cars do NOT change very often, so

Accepted Answer

A)  the real price of cars is very inflexible. 
B)  the prices of new cars can only be flexible if there are changes in the cost of materials. 
C)  price flexibility is not an important feature in the auto market. 
D)  price flexibility shows up primarily through the negotiations between buyers and sellers. 
A)  the real price of cars is very inflexible. 
B)  the prices of new cars can only be flexible if there are changes in the cost of materials. 
C)  price flexibility is not an important feature in the auto market. 
D)  price flexibility shows up primarily through the negotiations between buyers and sellers.

Question 14

Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well. If only the demand curve or the supply curve shifts, this suggests that

Accepted Answer

A)  movies are a normal good and incomes have increased. 
B)  high salaries for Hollywood actors have increased the cost of movie making. 
C)  movie theaters have experienced an increase in their operating costs due to increases in the minimum wage. 
D)  admission prices for other types of entertainment, such as live shows and sporting events, have also declined. 
A)  movies are a normal good and incomes have increased. 
B)  high salaries for Hollywood actors have increased the cost of movie making. 
C)  movie theaters have experienced an increase in their operating costs due to increases in the minimum wage. 
D)  admission prices for other types of entertainment, such as live shows and sporting events, have also declined.

Question 15

In situations in which prices cannot be used to signal relative scarcities of goods, which of the following can serve as a rationing mechanism?

Accepted Answer

A)  queuing 
B)  political power 
C)  random assignment 
D)  all of the above 
A)  queuing 
B)  political power 
C)  random assignment 
D)  all of the above

Question 16

In a freely operating market system, queuing is most likely to occur when

Accepted Answer

A)  selling necessities. 
B)  the market clearing price increases. 
C)  demand fluctuates unpredictably and quickly. 
D)  demand increases gradually over time. 
A)  selling necessities. 
B)  the market clearing price increases. 
C)  demand fluctuates unpredictably and quickly. 
D)  demand increases gradually over time.

Question 17

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

Accepted Answer

A)  the quantity sold would be 80 units. 
B)  the quantity sold would be 60 units. 
C)  the quantity demanded would be 100 units. 
D)  there would be a shortage of 20 units. 
A)  the quantity sold would be 80 units. 
B)  the quantity sold would be 60 units. 
C)  the quantity demanded would be 100 units. 
D)  there would be a shortage of 20 units.

Question 18

An increase in the equilibrium quantity of good B can be caused by

Accepted Answer

A)  an increase the price of inputs utilized in producing good B. 
B)  an increase in the price of good B. 
C)  a technological improvement in the process of producing good B. 
D)  a reduction in the number of producers of good B. 
A)  an increase the price of inputs utilized in producing good B. 
B)  an increase in the price of good B. 
C)  a technological improvement in the process of producing good B. 
D)  a reduction in the number of producers of good B.

Question 19

The difference between the total amount that people would have been willing to pay for the total quantity produced and consumed in a market and what they actually pay at the market clearing price is called

Accepted Answer

A)  production excess. 
B)  excess demand. 
C)  market surplus. 
D)  consumer surplus. 
A)  production excess. 
B)  excess demand. 
C)  market surplus. 
D)  consumer surplus.

Question 20

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Accepted Answer

A)  create a shortage of agricultural products. 
B)  result in the quantity of these products supplied exceeding the quantity demanded at the floor price. 
C)  benefit taxpayers, who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price. 
D)  benefit consumers, who are willing and able to purchase more agricultural products at the floor price. 
A)  create a shortage of agricultural products. 
B)  result in the quantity of these products supplied exceeding the quantity demanded at the floor price. 
C)  benefit taxpayers, who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price. 
D)  benefit consumers, who are willing and able to purchase more agricultural products at the floor price.

Exam 4: Extensions of Demand and Supply Analysis

Price controls

In the price system

A technological advancement has just occurred in the phone camera industry. In the computer chip market this will lead to

-Price controls

What would happen in the market for rice if its demand increased but the price was NOT allowed to change?

-A black market may occur when

Hospitals announce that there are not enough nurses available to keep them fully staffed. Economically speaking, what does this announcement mean?

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Intermediaries, known as middlemen, specialize in

Suppose that initially a market is in equilibrium at a price of $10 and a quantity of 5000 units per day. Several months later, the market is in a new equilibrium at a price of $5 and a quantity of 5000 units per day. What happened in the market?

If the demand for a product falls and the supply stays the same

Which of the following is NOT a voluntary exchange?

List prices on new cars do NOT change very often, so

Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well. If only the demand curve or the supply curve shifts, this suggests that

In situations in which prices cannot be used to signal relative scarcities of goods, which of the following can serve as a rationing mechanism?

In a freely operating market system, queuing is most likely to occur when

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

An increase in the equilibrium quantity of good B can be caused by

The difference between the total amount that people would have been willing to pay for the total quantity produced and consumed in a market and what they actually pay at the market clearing price is called

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

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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