Question 1

In the United States, the minimum wage is defined as

Accepted Answer

A)  the wage that the youngest job entrant into the job market makes. 
B)  the lowest wage that a corporation should pay a worker if the corporation wants to ensure that its employees are well trained. 
C)  the lowest hourly wage rate a firm may legally pay its workers, as legislated by the U.S. government. 
D)  the wage ceiling above which a firm no longer must pay its employees additional benefits. 
A)  the wage that the youngest job entrant into the job market makes. 
B)  the lowest wage that a corporation should pay a worker if the corporation wants to ensure that its employees are well trained. 
C)  the lowest hourly wage rate a firm may legally pay its workers, as legislated by the U.S. government. 
D)  the wage ceiling above which a firm no longer must pay its employees additional benefits.

Question 2

In the housing market, rents serve the purpose of

Accepted Answer

A)  making landlords rich. 
B)  rationing the availability of existing housing. 
C)  providing an entry by the government into the housing market. 
D)  increasing tax collections by the community. 
A)  making landlords rich. 
B)  rationing the availability of existing housing. 
C)  providing an entry by the government into the housing market. 
D)  increasing tax collections by the community.

Question 3

-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 4

The signaling aspect of the market system refer to

Accepted Answer

A)  legal requirements for contracts and exchanges. 
B)  the price of the good to the consumer and producer. 
C)  the voluntary character of the exchange. 
D)  transaction costs of carrying out exchanges. 
A)  legal requirements for contracts and exchanges. 
B)  the price of the good to the consumer and producer. 
C)  the voluntary character of the exchange. 
D)  transaction costs of carrying out exchanges.

Question 5

Which of the following is one of the functions of rental prices?

Accepted Answer

A)  to redistribute income from landlords to renters 
B)  to redistribute income from renters to landlords 
C)  to signal to the local government when taxes on rental units should be increased 
D)  to ration the use of existing housing for current consumers 
A)  to redistribute income from landlords to renters 
B)  to redistribute income from renters to landlords 
C)  to signal to the local government when taxes on rental units should be increased 
D)  to ration the use of existing housing for current consumers

Question 6

Who bears the costs of a program to control rents at a maximum level?

Accepted Answer

A)  landlords or owners of housing units 
B)  consumers who face difficulty moving to a more suitable apartment 
C)  homeless who cannot find rental units 
D)  all of these 
A)  landlords or owners of housing units 
B)  consumers who face difficulty moving to a more suitable apartment 
C)  homeless who cannot find rental units 
D)  all of these

Question 7

Would it take longer for a labor market to move to a new equilibrium for house painters or architects? Why?

Accepted Answer

It would take longer for the market for

Question 8

Transaction costs are

Accepted Answer

A)  production costs. 
B)  taxes on production. 
C)  regulations on production. 
D)  costs associated with exchange. 
A)  production costs. 
B)  taxes on production. 
C)  regulations on production. 
D)  costs associated with exchange.

Question 9

If supply decreases and demand increases

Accepted Answer

A)  the market clearing price definitely rises, and the equilibrium quantity falls. 
B)  the market clearing price definitely rises, and the equilibrium quantity is indeterminate. 
C)  the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate. 
D)  the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely falls. 
A)  the market clearing price definitely rises, and the equilibrium quantity falls. 
B)  the market clearing price definitely rises, and the equilibrium quantity is indeterminate. 
C)  the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate. 
D)  the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely falls.

Question 10

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

Accepted Answer

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

Question 11

Queuing is a way to ration goods

Accepted Answer

A)  on a first-come, first-serve basis. 
B)  through prices. 
C)  through the use of political power. 
D)  through markets. 
A)  on a first-come, first-serve basis. 
B)  through prices. 
C)  through the use of political power. 
D)  through markets.

Question 12

Suppose we observe the following two simultaneous events in the market for fish. First, there is a decrease in the demand for fish due to changes in consumer tastes. And second, there is a reduction in seafood supply due to oil spills in the oceans. We know with certainty that these two simultaneous events will cause which of the following?

Accepted Answer

A)  no change in the equilibrium quantity and a reduction in the equilibrium price 
B)  an increase in the equilibrium quantity and in the equilibrium price 
C)  a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price 
D)  a decrease in the equilibrium quantity and an increase in the equilibrium price 
A)  no change in the equilibrium quantity and a reduction in the equilibrium price 
B)  an increase in the equilibrium quantity and in the equilibrium price 
C)  a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price 
D)  a decrease in the equilibrium quantity and an increase in the equilibrium price

Question 13

-Refer to the above table for tablets. Suppose the demand for smartphones rises because more people use the Internet with a tablet. The new equilibrium price will be

Accepted Answer

A)  $200. 
B)  $275. 
C)  more than $275. 
D)  impossible to be determined given the information. 
A)  $200. 
B)  $275. 
C)  more than $275. 
D)  impossible to be determined given the information.

Question 14

Individuals who specialize in activities that lower transaction costs are

Accepted Answer

A)  consumers. 
B)  producers. 
C)  bureaucrats. 
D)  middlemen. 
A)  consumers. 
B)  producers. 
C)  bureaucrats. 
D)  middlemen.

Question 15

What would happen in the market for rental housing in your community if the local government legally mandated rents that were below the market clearing price?

Accepted Answer

A)  There would be a surplus of rental housing. 
B)  There would be a shortage of rental housing. 
C)  The demand for rental housing would increase. 
D)  The supply of rental housing would decrease. 
A)  There would be a surplus of rental housing. 
B)  There would be a shortage of rental housing. 
C)  The demand for rental housing would increase. 
D)  The supply of rental housing would decrease.

Question 16

An import quota

Accepted Answer

A)  is a price ceiling imposed on an imported good. 
B)  is a price floor imposed on an imported good. 
C)  is a supply restriction limiting the quantity of a good that can be imported. 
D)  is a legislative requirement stating that firms which import some of their merchandise must hire a certain number of immigrant workers. 
A)  is a price ceiling imposed on an imported good. 
B)  is a price floor imposed on an imported good. 
C)  is a supply restriction limiting the quantity of a good that can be imported. 
D)  is a legislative requirement stating that firms which import some of their merchandise must hire a certain number of immigrant workers.

Question 17

For which situation would we expect the adjustment speed to be the fastest?

Accepted Answer

A)  The demand for surgeons increases. 
B)  A large increase in birth rates leads to an increase in elementary school teachers. 
C)  The demand for movie videos increases. 
D)  The demand for office space in downtown Chicago increases. 
A)  The demand for surgeons increases. 
B)  A large increase in birth rates leads to an increase in elementary school teachers. 
C)  The demand for movie videos increases. 
D)  The demand for office space in downtown Chicago increases.

Question 18

In a market system, relative scarcities of resources are indicated by

Accepted Answer

A)  supply and demand being out of equilibrium. 
B)  surpluses. 
C)  excess demand and excess supply. 
D)  relative market prices. 
A)  supply and demand being out of equilibrium. 
B)  surpluses. 
C)  excess demand and excess supply. 
D)  relative market prices.

Question 19

More farmers have recently entered the corn industry. In addition there has been a technological advancement in the fertilizer industry providing corn farmers with a cheaper and a more effective fertilizer. In the market for corn, the effects these changes will have on the equilibrium price and quantity are

Accepted Answer

A)  price will increase, and quantity will decrease. 
B)  price will increase, and the effect on quantity is indeterminate. 
C)  price will decrease, and quantity will increase. 
D)  price will decrease, and the effect on quantity is indeterminate. 
A)  price will increase, and quantity will decrease. 
B)  price will increase, and the effect on quantity is indeterminate. 
C)  price will decrease, and quantity will increase. 
D)  price will decrease, and the effect on quantity is indeterminate.

Question 20

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.

Exam 4: Extensions of Demand and Supply Analysis

In the United States, the minimum wage is defined as

In the housing market, rents serve the purpose of

-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

The signaling aspect of the market system refer to

Which of the following is one of the functions of rental prices?

Who bears the costs of a program to control rents at a maximum level?

Would it take longer for a labor market to move to a new equilibrium for house painters or architects? Why?

Transaction costs are

If supply decreases and demand increases

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

Queuing is a way to ration goods

-Refer to the above table for tablets. Suppose the demand for smartphones rises because more people use the Internet with a tablet. The new equilibrium price will be

Individuals who specialize in activities that lower transaction costs are

What would happen in the market for rental housing in your community if the local government legally mandated rents that were below the market clearing price?

An import quota

For which situation would we expect the adjustment speed to be the fastest?

In a market system, relative scarcities of resources are indicated by

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

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

Filters