Question 1

An effective price ceiling occurs when

Accepted Answer

A) the government sets a maximum price for a good above the equilibrium price. 
B) the government sets a minimum price for a good above the equilibrium price. 
C) the government sets a minimum price for a good below the equilibrium price. 
D) the government sets a maximum price for a good below the equilibrium price. 
A) the government sets a maximum price for a good above the equilibrium price. 
B) the government sets a minimum price for a good above the equilibrium price. 
C) the government sets a minimum price for a good below the equilibrium price. 
D) the government sets a maximum price for a good below the equilibrium price.

Question 2

Garbanzo Beans  
-Consider the above table.If the government imposes a price ceiling on garbanzo beans of $8,what would be the likely result?

Accepted Answer

A) a surplus of 2,000 garbanzo beans on the market 
B) a shortage of 2,000 garbanzo beans on the market 
C) Market equilibrium will be reached. 
D) The quantity demanded of garbanzo beans would fall to zero. 
A) a surplus of 2,000 garbanzo beans on the market 
B) a shortage of 2,000 garbanzo beans on the market 
C) Market equilibrium will be reached. 
D) The quantity demanded of garbanzo beans would fall to zero.

Question 3

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 4

Rent control is an example of

Accepted Answer

A) a price floor. 
B) a price ceiling. 
C) the rationing function of prices not working. 
D) the government increasing the demand for certain products. 
A) a price floor. 
B) a price ceiling. 
C) the rationing function of prices not working. 
D) the government increasing the demand for certain products.

Question 5

A reduction in the minimum wage will tend to cause which of the following?

Accepted Answer

A) a reduction in poverty 
B) an increase in the number of workers employed 
C) an increase in the quantity supplied of labor 
D) a reduction in the quantity demanded of labor 
A) a reduction in poverty 
B) an increase in the number of workers employed 
C) an increase in the quantity supplied of labor 
D) a reduction in the quantity demanded of labor

Question 6

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 7

A decrease in demand and a decrease in supply will lead to

Accepted Answer

A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price quantity. 
C) an unambiguous decrease in price,but the effect on quantity is indeterminate. 
D) an unambiguous decrease in quantity,but the effect on price is indeterminate. 
A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price quantity. 
C) an unambiguous decrease in price,but the effect on quantity is indeterminate. 
D) an unambiguous decrease in quantity,but the effect on price is indeterminate.

Question 8

Specialists who try to lower transaction costs are

Accepted Answer

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

Question 9

Why does an economy need a rationing mechanism?

Accepted Answer

A) because of scarcity 
B) because it preserves the power of the wealthy 
C) because it eliminates poverty 
D) All of the above are correct. 
A) because of scarcity 
B) because it preserves the power of the wealthy 
C) because it eliminates poverty 
D) All of the above are correct.

Question 10

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 11

Suppose that there is an improvement in technology in the market for iPhones.Which of the following is true?

Accepted Answer

A) Supply will increase and the market clearing price will fall. 
B) Supply will increase and the market clearing price will rise. 
C) Demand will increase and the market clearing price will rise. 
D) Demand will increase and the market clearing price will fall. 
A) Supply will increase and the market clearing price will fall. 
B) Supply will increase and the market clearing price will rise. 
C) Demand will increase and the market clearing price will rise. 
D) Demand will increase and the market clearing price will fall.

Question 12

Following adjustments to a new equilibrium in a market,the market clearing price remains unchanged,but the equilibrium quantity is now lower.Which of the following could definitely have caused this outcome?

Accepted Answer

A) Demand and supply both increased. 
B) Demand and supply both decreased. 
C) Demand increased,and supply decreased. 
D) Demand decreased,and supply increased. 
A) Demand and supply both increased. 
B) Demand and supply both decreased. 
C) Demand increased,and supply decreased. 
D) Demand decreased,and supply increased.

Question 13

Which of the following statements about a price system is true? I.Prices ration goods and services.
II.Prices indicate relative scarcity.

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 14

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 15

In a price system,changes in prices

Accepted Answer

A) make it difficult for the system to function well. 
B) imply that people have made mistakes in the past. 
C) signal to everyone in the system what goods are relatively more or less scarce. 
D) signal to policy makers what goods should and should not be taxed more. 
A) make it difficult for the system to function well. 
B) imply that people have made mistakes in the past. 
C) signal to everyone in the system what goods are relatively more or less scarce. 
D) signal to policy makers what goods should and should not be taxed more.

Question 16

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.

Question 17

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 18

In recent years,the price of smartphones has fallen,while the quantity exchanged of smartphones has risen.We can conclude that this is most likely a result of

Accepted Answer

A) a decrease in supply while demand remained constant. 
B) an increase in demand while supply remained constant. 
C) an increase in demand that exceeded an increase in supply. 
D) an increase in supply that exceeded an increase in demand. 
A) a decrease in supply while demand remained constant. 
B) an increase in demand while supply remained constant. 
C) an increase in demand that exceeded an increase in supply. 
D) an increase in supply that exceeded an increase in demand.

Question 19

Of the following groups,which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?

Accepted Answer

A) Consumers,who purchase more units of the product than they did before the price support program was implemented 
B) Taxpayers,who no longer must provide funds to purchase surplus units of the product once the price support program is in place 
C) Producers,who earn a higher price on the sale of each unit and also sell more units,thereby unambiguously earning higher revenues 
D) The government,which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program 
A) Consumers,who purchase more units of the product than they did before the price support program was implemented 
B) Taxpayers,who no longer must provide funds to purchase surplus units of the product once the price support program is in place 
C) Producers,who earn a higher price on the sale of each unit and also sell more units,thereby unambiguously earning higher revenues 
D) The government,which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program

Question 20

The publication Consumer Reports reduces transaction costs on many purchases by

Accepted Answer

A) providing coupons. 
B) providing reliable information on product quality. 
C) advertising sales at discount stores. 
D) paying its employees low wages. 
A) providing coupons. 
B) providing reliable information on product quality. 
C) advertising sales at discount stores. 
D) paying its employees low wages.

An effective price ceiling occurs when

Garbanzo Beans -Consider the above table.If the government imposes a price ceiling on garbanzo beans of $8,what would be the likely result?

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

Rent control is an example of

A reduction in the minimum wage will tend to cause which of the following?

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

A decrease in demand and a decrease in supply will lead to

Specialists who try to lower transaction costs are

Why does an economy need a rationing mechanism?

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

Suppose that there is an improvement in technology in the market for iPhones.Which of the following is true?

Following adjustments to a new equilibrium in a market,the market clearing price remains unchanged,but the equilibrium quantity is now lower.Which of the following could definitely have caused this outcome?

Which of the following statements about a price system is true? I.Prices ration goods and services. II.Prices indicate relative scarcity.

In a price system,changes in prices

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

The signaling aspect of the market system refer to

In recent years,the price of smartphones has fallen,while the quantity exchanged of smartphones has risen.We can conclude that this is most likely a result of

Of the following groups,which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?

The publication Consumer Reports reduces transaction costs on many purchases by

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

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Extensions of Demand and Supply Analysis

An effective price ceiling occurs when

Garbanzo Beans -Consider the above table.If the government imposes a price ceiling on garbanzo beans of $8,what would be the likely result?

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

Rent control is an example of

A reduction in the minimum wage will tend to cause which of the following?

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

A decrease in demand and a decrease in supply will lead to

Specialists who try to lower transaction costs are

Why does an economy need a rationing mechanism?

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

Suppose that there is an improvement in technology in the market for iPhones.Which of the following is true?

Following adjustments to a new equilibrium in a market,the market clearing price remains unchanged,but the equilibrium quantity is now lower.Which of the following could definitely have caused this outcome?

Which of the following statements about a price system is true? I.Prices ration goods and services. II.Prices indicate relative scarcity.

In a price system,changes in prices

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

The signaling aspect of the market system refer to

In recent years,the price of smartphones has fallen,while the quantity exchanged of smartphones has risen.We can conclude that this is most likely a result of

Of the following groups,which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price?

The publication Consumer Reports reduces transaction costs on many purchases by

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

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters