Question 1

A price floor above the market clearing price typically results in I.an excess quantity supplied
II.a shortage
III.an excess quantity demand

Accepted Answer

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

Question 2

The market clearing price of corn has just increased.Which of the following could have caused this change?

Accepted Answer

A) a reduction in demand 
B) a reduction in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied 
A) a reduction in demand 
B) a reduction in supply 
C) an increase in quantity demanded 
D) an increase in quantity supplied

Question 3

Holding demand constant,a reduction in supply leads to

Accepted Answer

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

Question 4

All of the following reduce the transaction costs for consumers EXCEPT

Accepted Answer

A) eBay. 
B) a shopping mall. 
C) the Supreme Court decisions regarding the Second Amendment. 
D) a grocery store. 
A) eBay. 
B) a shopping mall. 
C) the Supreme Court decisions regarding the Second Amendment. 
D) a grocery store.

Question 5

Why does a sports car cost more than a mountain bike?

Accepted Answer

A) because sports car manufacturers are greedier than mountain bike manufacturers 
B) because sports cars are priced higher in order to make them attractive as status symbols 
C) because more scarce resources are required to produce a sports car than to produce a mountain bike 
D) because mountain bike manufacturers know that their customers have relatively low incomes 
A) because sports car manufacturers are greedier than mountain bike manufacturers 
B) because sports cars are priced higher in order to make them attractive as status symbols 
C) because more scarce resources are required to produce a sports car than to produce a mountain bike 
D) because mountain bike manufacturers know that their customers have relatively low incomes

Question 6

-Refer to the above figure.Suppose that the supply curve shifts from SA to SB while the demand curve shifts from DA to DB.Which of the following is true about the results of the shifts in the supply and demand curves?

Accepted Answer

A) The equilibrium price increases while the equilibrium quantity remains unchanged. 
B) Both the equilibrium price and equilibrium quantity increase. 
C) The equilibrium price remains unchanged while the equilibrium quantity increases. 
D) Both the equilibrium price and equilibrium quantity remain unchanged. 
A) The equilibrium price increases while the equilibrium quantity remains unchanged. 
B) Both the equilibrium price and equilibrium quantity increase. 
C) The equilibrium price remains unchanged while the equilibrium quantity increases. 
D) Both the equilibrium price and equilibrium quantity remain unchanged.

Question 7

A supply restriction that restricts the amount of a good that can be imported is a(n)

Accepted Answer

A) price floor. 
B) price ceiling. 
C) black market. 
D) import quota. 
A) price floor. 
B) price ceiling. 
C) black market. 
D) import quota.

Question 8

Which of the following statements is NOT true about the rationing of goods?

Accepted Answer

A) Goods can only be rationed by price. 
B) Goods can be rationed on a first come first serve basis. 
C) Goods can be rationed by random. 
D) Goods can be rationed by the use of coupons. 
A) Goods can only be rationed by price. 
B) Goods can be rationed on a first come first serve basis. 
C) Goods can be rationed by random. 
D) Goods can be rationed by the use of coupons.

Question 9

Rent controls are

Accepted Answer

A) when rents are set above the market clearing level to aid landlords. 
B) used to provide incentives to contractors to build new apartments. 
C) used to generate revenue for the local government. 
D) when rents are set below the market clearing level. 
A) when rents are set above the market clearing level to aid landlords. 
B) used to provide incentives to contractors to build new apartments. 
C) used to generate revenue for the local government. 
D) when rents are set below the market clearing level.

Question 10

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 11

Holding supply constant,an increase 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

Which of the following will cause,other things being equal,a movement along the supply curve for LED televisions?

Accepted Answer

A) An improvement in the technology of producing LED televisions. 
B) An increase in resource costs for producing LED televisions. 
C) A reduction in the price of LED televisions. 
D) An expectation that the price of LED televisions will be lower in the future. 
A) An improvement in the technology of producing LED televisions. 
B) An increase in resource costs for producing LED televisions. 
C) A reduction in the price of LED televisions. 
D) An expectation that the price of LED televisions will be lower in the future.

Question 13

The textbook suggests that rent controls

Accepted Answer

A) actually contribute to the housing boom in an area where they are applied. 
B) actually contribute to the housing shortage in the area where they are applied. 
C) are used in a government kickback scheme. 
D) have no effect on the local housing market. 
A) actually contribute to the housing boom in an area where they are applied. 
B) actually contribute to the housing shortage in the area where they are applied. 
C) are used in a government kickback scheme. 
D) have no effect on the local housing market.

Question 14

Describe the market process that should occur if the price of a product is below its equilibrium price;now describe what would occur if the price is above its equilibrium price,assuming no market interference.

Accepted Answer

If price is below its equilibrium price,

Question 15

If both buyers and sellers expect the price of a commodity to fall in the future,it is likely that the market clearing price ________ and the equilibrium quantity ________.

Accepted Answer

A) will fall,cannot be predicted 
B) will rise,cannot be predicted 
C) cannot be predicted,will fall 
D) cannot be predicted,will rise 
A) will fall,cannot be predicted 
B) will rise,cannot be predicted 
C) cannot be predicted,will fall 
D) cannot be predicted,will rise

Question 16

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 17

Which of the following is NOT a predictable result of a price ceiling set below the market clearing price?

Accepted Answer

A) An illegal market in the good 
B) Excess quantity supplied 
C) Excess quantity demanded 
D) Lines to purchase the product 
A) An illegal market in the good 
B) Excess quantity supplied 
C) Excess quantity demanded 
D) Lines to purchase the product

Question 18

A maximum legal price that may be charged for a particular good or service is known as a

Accepted Answer

A) price floor. 
B) price ceiling. 
C) black market. 
D) price support. 
A) price floor. 
B) price ceiling. 
C) black market. 
D) price support.

Question 19

An example of a quantity restriction is

Accepted Answer

A) the minimum wage. 
B) an import quota. 
C) rent controls. 
D) price supports in agriculture. 
A) the minimum wage. 
B) an import quota. 
C) rent controls. 
D) price supports in agriculture.

Question 20

A price ceiling represents

Accepted Answer

A) a maximum price that can be legally charged for a product or service. 
B) a minimum price that can be legally charged for a good or service. 
C) a lottery imposed upon producers by the government. 
D) a first come,first served mechanism for controlling prices. 
A) a maximum price that can be legally charged for a product or service. 
B) a minimum price that can be legally charged for a good or service. 
C) a lottery imposed upon producers by the government. 
D) a first come,first served mechanism for controlling prices.

A price floor above the market clearing price typically results in I.an excess quantity supplied II.a shortage III.an excess quantity demand

The market clearing price of corn has just increased.Which of the following could have caused this change?

Holding demand constant,a reduction in supply leads to

All of the following reduce the transaction costs for consumers EXCEPT

Why does a sports car cost more than a mountain bike?

-Refer to the above figure.Suppose that the supply curve shifts from SA to SB while the demand curve shifts from DA to DB.Which of the following is true about the results of the shifts in the supply and demand curves?

A supply restriction that restricts the amount of a good that can be imported is a(n)

Which of the following statements is NOT true about the rationing of goods?

Rent controls are

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

Holding supply constant,an increase in demand leads to

Which of the following will cause,other things being equal,a movement along the supply curve for LED televisions?

The textbook suggests that rent controls

Describe the market process that should occur if the price of a product is below its equilibrium price;now describe what would occur if the price is above its equilibrium price,assuming no market interference.

If both buyers and sellers expect the price of a commodity to fall in the future,it is likely that the market clearing price and the equilibrium quantity .

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

Which of the following is NOT a predictable result of a price ceiling set below the market clearing price?

A maximum legal price that may be charged for a particular good or service is known as a

An example of a quantity restriction is

A price ceiling represents

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

A price floor above the market clearing price typically results in I.an excess quantity supplied II.a shortage III.an excess quantity demand

The market clearing price of corn has just increased.Which of the following could have caused this change?

Holding demand constant,a reduction in supply leads to

All of the following reduce the transaction costs for consumers EXCEPT

Why does a sports car cost more than a mountain bike?

-Refer to the above figure.Suppose that the supply curve shifts from SA to SB while the demand curve shifts from DA to DB.Which of the following is true about the results of the shifts in the supply and demand curves?

A supply restriction that restricts the amount of a good that can be imported is a(n)

Which of the following statements is NOT true about the rationing of goods?

Rent controls are

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

Holding supply constant,an increase in demand leads to

Which of the following will cause,other things being equal,a movement along the supply curve for LED televisions?

The textbook suggests that rent controls

Describe the market process that should occur if the price of a product is below its equilibrium price;now describe what would occur if the price is above its equilibrium price,assuming no market interference.

If both buyers and sellers expect the price of a commodity to fall in the future,it is likely that the market clearing price ________ and the equilibrium quantity ________.

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

Which of the following is NOT a predictable result of a price ceiling set below the market clearing price?

A maximum legal price that may be charged for a particular good or service is known as a

An example of a quantity restriction is

A price ceiling represents

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

If both buyers and sellers expect the price of a commodity to fall in the future,it is likely that the market clearing price and the equilibrium quantity .