Question 1

When supply and demand for a product increase simultaneously,we

Accepted Answer

A) can predict that both the market clearing price and the equilibrium quantity will increase. 
B) can predict that both the market clearing price and the equilibrium quantity will decrease. 
C) cannot predict the market clearing price,but know that the equilibrium quantity will increase. 
D) cannot predict the change in either the equilibrium quantity or the market clearing price. 
A) can predict that both the market clearing price and the equilibrium quantity will increase. 
B) can predict that both the market clearing price and the equilibrium quantity will decrease. 
C) cannot predict the market clearing price,but know that the equilibrium quantity will increase. 
D) cannot predict the change in either the equilibrium quantity or the market clearing price.

Question 2

Who gains and who loses from rent controls?

Accepted Answer

Those who gain are people who live in an

Question 3

A decrease in demand and an increase in supply will lead to

Accepted Answer

A) unambiguous increases in both price and quantity. 
B) unambiguous decreases in both price and 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 and 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 4

Nonprice rationing devices are required

Accepted Answer

A) because the price system does not allocate resources efficiently. 
B) when there are price floors but not when there are price ceilings. 
C) so that prices will go back to equilibrium. 
D) to allocate goods when there is a price ceiling. 
A) because the price system does not allocate resources efficiently. 
B) when there are price floors but not when there are price ceilings. 
C) so that prices will go back to equilibrium. 
D) to allocate goods when there is a price ceiling.

Question 5

Which of the following is an example of a price ceiling?

Accepted Answer

A) The minimum wage 
B) Agricultural price supports 
C) Rent controls 
D) None of the above is correct 
A) The minimum wage 
B) Agricultural price supports 
C) Rent controls 
D) None of the above is correct

Question 6

The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because

Accepted Answer

A) all gains from mutually beneficial trade are captured. 
B) the Federal Trade Commission regulates the market. 
C) of the rise of the legislative apparatus that supports trade. 
D) the Justice Department monitors market activities. 
A) all gains from mutually beneficial trade are captured. 
B) the Federal Trade Commission regulates the market. 
C) of the rise of the legislative apparatus that supports trade. 
D) the Justice Department monitors market activities.

Question 7

If producers must receive a higher price to be induced to produce any quantity,we can conclude that

Accepted Answer

A) supply decreased. 
B) demand decreased. 
C) both supply and demand increased. 
D) demand increased. 
A) supply decreased. 
B) demand decreased. 
C) both supply and demand increased. 
D) demand increased.

Question 8

The long-run effect of rent control on an area includes

Accepted Answer

A) rampant building of new low-income housing. 
B) many new luxury apartments new luxury apartments will be built. 
C) new investors into the real estate market in the area. 
D) less investment into the real estate market in the area. 
A) rampant building of new low-income housing. 
B) many new luxury apartments new luxury apartments will be built. 
C) new investors into the real estate market in the area. 
D) less investment into the real estate market in the area.

Question 9

Assume that the market clearing price for a shirt is $20,but that the maximum price that can be charged is $15.This is an example of

Accepted Answer

A) a price control that will lead to a surplus of shirts on the market. 
B) a price floor that will lead to a shortage of shirts on the market. 
C) markets failing to ration a fixed quantity of a good. 
D) a price ceiling that will likely lead to a shortage of shirts on the market. 
A) a price control that will lead to a surplus of shirts on the market. 
B) a price floor that will lead to a shortage of shirts on the market. 
C) markets failing to ration a fixed quantity of a good. 
D) a price ceiling that will likely lead to a shortage of shirts on the market.

Question 10

An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a

Accepted Answer

A) socialist system. 
B) communist system. 
C) queuing system. 
D) market system. 
A) socialist system. 
B) communist system. 
C) queuing system. 
D) market system.

Question 11

Holding supply constant,a reduction in demand leads to

Accepted Answer

A) lower prices and higher quantity supplied. 
B) lower prices and lower quantity supplied. 
C) higher prices and higher quantity supplied. 
D) higher prices and lower quantity supplied. 
A) lower prices and higher quantity supplied. 
B) lower prices and lower quantity supplied. 
C) higher prices and higher quantity supplied. 
D) higher prices and lower quantity supplied.

Question 12

Roses are more expensive on Valentine's Day than at other times of the year,yet sales of roses are highest on that day.How does economic theory account for this?

Accepted Answer

A) An increase in demand pushes up the market clearing price of roses. 
B) People buying the roses are irrational. 
C) Roses are not subject to the law of demand. 
D) Florists know that there are no substitutes for roses,so they take advantage of consumers on Valentine's Day. 
A) An increase in demand pushes up the market clearing price of roses. 
B) People buying the roses are irrational. 
C) Roses are not subject to the law of demand. 
D) Florists know that there are no substitutes for roses,so they take advantage of consumers on Valentine's Day.

Question 13

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 14

As compared to the market clearing price,the total amount of consumer surplus and producer surplus is

Accepted Answer

A) greater for a government-imposed price floor that is higher than that market clearing price. 
B) greater for a government-imposed price ceiling that is lower than that market clearing price. 
C) the same as a government-imposed price floor that is higher than that market clearing price. 
D) smaller for a government-imposed price ceiling that is lower than that market clearing price. 
A) greater for a government-imposed price floor that is higher than that market clearing price. 
B) greater for a government-imposed price ceiling that is lower than that market clearing price. 
C) the same as a government-imposed price floor that is higher than that market clearing price. 
D) smaller for a government-imposed price ceiling that is lower than that market clearing price.

Question 15

An import quota is

Accepted Answer

A) a quantity restriction. 
B) a price ceiling. 
C) a price floor. 
D) something imposed on agricultural goods grown by American farmers. 
A) a quantity restriction. 
B) a price ceiling. 
C) a price floor. 
D) something imposed on agricultural goods grown by American farmers.

Question 16

Which of the following is NOT an attempt to evade rent controls?

Accepted Answer

A) Make life unpleasant for tenants 
B) Require tenants to get furniture from the landlord 
C) Subletting 
D) Using the courts to challenge the sublease of a tenant 
A) Make life unpleasant for tenants 
B) Require tenants to get furniture from the landlord 
C) Subletting 
D) Using the courts to challenge the sublease of a tenant

Question 17

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 18

The prices of certain goods,such as ice and gasoline,often increase after a natural disaster such as a hurricane.The economic explanation for this observation is that

Accepted Answer

A) people panic in disaster situations. 
B) disasters bring out the worst in people. 
C) the disaster temporarily reduces the supply of the goods and increases the demand for the goods. 
D) the disaster temporarily reduces the supply of the goods and reduces the demand for the goods. 
A) people panic in disaster situations. 
B) disasters bring out the worst in people. 
C) the disaster temporarily reduces the supply of the goods and increases the demand for the goods. 
D) the disaster temporarily reduces the supply of the goods and reduces the demand for the goods.

Question 19

With respect to the market clearing price and the equilibrium quantity of good X,increases in the demand for and the supply of good X will definitely

Accepted Answer

A) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X. 
B) reduce the market clearing price and the equilibrium quantity of good X. 
C) increase the market clearing price and the equilibrium quantity of good X. 
D) increase the equilibrium quantity of good X but have an uncertain impact on the market clearing price of X. 
A) increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X. 
B) reduce the market clearing price and the equilibrium quantity of good X. 
C) increase the market clearing price and the equilibrium quantity of good X. 
D) increase the equilibrium quantity of good X but have an uncertain impact on the market clearing price of X.

Question 20

The decrease in the price of gasoline to a national average of less than $3.20 during the summer of 2012 was most likely a result of

Accepted Answer

A) an increase in demand due to reduced summer driving. 
B) an increase in supply resulting from higher refinery output. 
C) an increase in demand due to increase in summer driving along with a decrease in supply resulting from reduced refinery output. 
D) an increase in supply resulting from higher refinery output along with a decrease in demand in summer driving. 
A) an increase in demand due to reduced summer driving. 
B) an increase in supply resulting from higher refinery output. 
C) an increase in demand due to increase in summer driving along with a decrease in supply resulting from reduced refinery output. 
D) an increase in supply resulting from higher refinery output along with a decrease in demand in summer driving.

When supply and demand for a product increase simultaneously,we

Who gains and who loses from rent controls?

A decrease in demand and an increase in supply will lead to

Nonprice rationing devices are required

Which of the following is an example of a price ceiling?

The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because

If producers must receive a higher price to be induced to produce any quantity,we can conclude that

The long-run effect of rent control on an area includes

Assume that the market clearing price for a shirt is $20,but that the maximum price that can be charged is $15.This is an example of

An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a

Holding supply constant,a reduction in demand leads to

Roses are more expensive on Valentine's Day than at other times of the year,yet sales of roses are highest on that day.How does economic theory account for this?

In the price system,

As compared to the market clearing price,the total amount of consumer surplus and producer surplus is

An import quota is

Which of the following is NOT an attempt to evade rent controls?

An import quota

The prices of certain goods,such as ice and gasoline,often increase after a natural disaster such as a hurricane.The economic explanation for this observation is that

With respect to the market clearing price and the equilibrium quantity of good X,increases in the demand for and the supply of good X will definitely

The decrease in the price of gasoline to a national average of less than $3.20 during the summer of 2012 was most likely a result of

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

When supply and demand for a product increase simultaneously,we

Who gains and who loses from rent controls?

A decrease in demand and an increase in supply will lead to

Nonprice rationing devices are required

Which of the following is an example of a price ceiling?

The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because

If producers must receive a higher price to be induced to produce any quantity,we can conclude that

The long-run effect of rent control on an area includes

Assume that the market clearing price for a shirt is $20,but that the maximum price that can be charged is $15.This is an example of

An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a

Holding supply constant,a reduction in demand leads to

Roses are more expensive on Valentine's Day than at other times of the year,yet sales of roses are highest on that day.How does economic theory account for this?

In the price system,

As compared to the market clearing price,the total amount of consumer surplus and producer surplus is

An import quota is

Which of the following is NOT an attempt to evade rent controls?

An import quota

The prices of certain goods,such as ice and gasoline,often increase after a natural disaster such as a hurricane.The economic explanation for this observation is that

With respect to the market clearing price and the equilibrium quantity of good X,increases in the demand for and the supply of good X will definitely

The decrease in the price of gasoline to a national average of less than $3.20 during the summer of 2012 was most likely a result of

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