Question 1

The market clearing price of computer modems has just decreased.Which of the following could have caused this change?

Accepted Answer

A) a decrease in supply at the same time that demand increases 
B) an increase in supply at the same time that demand decreases 
C) a decrease in supply with demand unchanged 
D) an increase in demand with supply unchanged 
A) a decrease in supply at the same time that demand increases 
B) an increase in supply at the same time that demand decreases 
C) a decrease in supply with demand unchanged 
D) an increase in demand with supply unchanged

Question 2

Prices play a role in a market

Accepted Answer

A) because they distribute scarce goods to those consumers who value them most highly. 
B) because when prices are in equilibrium,product shortages or surpluses can occur. 
C) because they help eliminate poverty. 
D) because they eliminate scarcity. 
A) because they distribute scarce goods to those consumers who value them most highly. 
B) because when prices are in equilibrium,product shortages or surpluses can occur. 
C) because they help eliminate poverty. 
D) because they eliminate scarcity.

Question 3

-According to the above figure,if the government imposes a minimum wage equal to Wm,the effect will be

Accepted Answer

A) a reduction in employment from Qe to Qm. 
B) an increase in employment from Qe to Qm. 
C) a decrease in labor supplied,from C to E. 
D) an increase in labor supplied,from A to E. 
A) a reduction in employment from Qe to Qm. 
B) an increase in employment from Qe to Qm. 
C) a decrease in labor supplied,from C to E. 
D) an increase in labor supplied,from A to E.

Question 4

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 5

People often complain about price gouging after a disaster such as a hurricane.Suppose the government successfully prevented price increases due to the disaster.We would expect

Accepted Answer

A) reconstruction to take longer because the quantity supplied of new materials would increase more slowly. 
B) reconstruction to take less time because the demand for materials would increase faster. 
C) reconstruction never to occur. 
D) reconstruction to take less time because the government could rebuild more quickly when people are not in the way. 
A) reconstruction to take longer because the quantity supplied of new materials would increase more slowly. 
B) reconstruction to take less time because the demand for materials would increase faster. 
C) reconstruction never to occur. 
D) reconstruction to take less time because the government could rebuild more quickly when people are not in the way.

Question 6

-Refer to the above figure.A price support set at   will

Accepted Answer

A) lead to a surplus of   minus   . 
B) lead to a shortage of   minus   . 
C) lead to an equilibrium quantity of   . 
D) be ineffective. 
A) lead to a surplus of   minus   . 
B) lead to a shortage of   minus   . 
C) lead to an equilibrium quantity of   . 
D) be ineffective.

Question 7

Which of the following statements about markets is correct? I.A market helps resources move to their highest-valued uses by means of prices.
II.A market encompasses the exchange arrangements of both buyers and sellers.

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 8

The price of a good always changes when

Accepted Answer

A) either a shortage or a surplus occurs. 
B) quantity demanded and quantity supplied are constant. 
C) there is an increase in demand and an increase in supply. 
D) there is a decrease in demand and a decrease in supply. 
A) either a shortage or a surplus occurs. 
B) quantity demanded and quantity supplied are constant. 
C) there is an increase in demand and an increase in supply. 
D) there is a decrease in demand and a decrease in supply.

Question 9

-Refer to the above figure.A price ceiling has been set at   ,and a black market has opened.The equilibrium black market quantity will be

Accepted Answer

A) below   
B) above   
C) between   and   
D)    
A) below   
B) above   
C) between   and   
D)

Question 10

An increase in demand and a decrease in supply will lead to an

Accepted Answer

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

Question 11

-Refer to the above figure.A price control has been set which has led to a surplus.This means that a

Accepted Answer

A) price ceiling has been set at   . 
B) price floor has been set at   . 
C) price ceiling has been set at   . 
D) price floor has been set at   . 
A) price ceiling has been set at   . 
B) price floor has been set at   . 
C) price ceiling has been set at   . 
D) price floor has been set at   .

Question 12

Which of the following is a main characteristic of exchanges in the market system?

Accepted Answer

A) Decisions to trade are based on individuals' self interest. 
B) Exchanges are highly regulated by the government. 
C) Sellers hire economists to determine the market clearing price. 
D) Exchanges are part of the legislative imperative. 
A) Decisions to trade are based on individuals' self interest. 
B) Exchanges are highly regulated by the government. 
C) Sellers hire economists to determine the market clearing price. 
D) Exchanges are part of the legislative imperative.

Question 13

If the government sets a minimum price at which a good or service can be sold,it thereby creates

Accepted Answer

A) a price ceiling. 
B) a black market price. 
C) a price floor. 
D) an illegal price control. 
A) a price ceiling. 
B) a black market price. 
C) a price floor. 
D) an illegal price control.

Question 14

-Refer to the above figure.If the government imposes a price ceiling of $20,

Accepted Answer

A) the quantity of goods that will be traded is 100. 
B) the quantity of goods that will be traded is 200. 
C) the quantity of goods that will be traded is 150. 
D) the quantity of goods that will be traded is 0. 
A) the quantity of goods that will be traded is 100. 
B) the quantity of goods that will be traded is 200. 
C) the quantity of goods that will be traded is 150. 
D) the quantity of goods that will be traded is 0.

Question 15

What are the effects of an increase in the minimum wage? Who would be most affected?

Accepted Answer

An increase in the minimum wage induces

Question 16

-Refer to the above figure.Suppose the demand curve shifts from DA to DB,while the supply curve remains at SA.Which of the following statements is FALSE?

Accepted Answer

A) There has been an increase in demand. 
B) Supply has increased. 
C) More consumers in the market might have caused the demand curve to shift. 
D) The new equilibrium price is P2,and the new equilibrium quantity is F. 
A) There has been an increase in demand. 
B) Supply has increased. 
C) More consumers in the market might have caused the demand curve to shift. 
D) The new equilibrium price is P2,and the new equilibrium quantity is F.

Question 17

If supply increases and demand decreases,

Accepted Answer

A) the market clearing price definitely rises,and the equilibrium quantity definitely falls. 
B) the market clearing price definitely rises,and the effect on 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 definitely falls. 
B) the market clearing price definitely rises,and the effect on 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 18

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 19

In New York City,apartment rent can be adjusted only when a tenant leaves.This leads

Accepted Answer

A) people to change apartments often. 
B) landlords to encourage tenants to stay in their apartments. 
C) tenants to stay in apartments longer than they would otherwise. 
D) businesses to build new rental units. 
A) people to change apartments often. 
B) landlords to encourage tenants to stay in their apartments. 
C) tenants to stay in apartments longer than they would otherwise. 
D) businesses to build new rental units.

Question 20

-Refer to the above figure.Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA.Which of the following is true?

Accepted Answer

A) Only quantity supplied has increased. 
B) Only quantity demanded has decreased. 
C) Supply has increased. 
D) Supply has decreased. 
A) Only quantity supplied has increased. 
B) Only quantity demanded has decreased. 
C) Supply has increased. 
D) Supply has decreased.

The market clearing price of computer modems has just decreased.Which of the following could have caused this change?

Prices play a role in a market

-According to the above figure,if the government imposes a minimum wage equal to Wm,the effect will be

A black market may occur when

People often complain about price gouging after a disaster such as a hurricane.Suppose the government successfully prevented price increases due to the disaster.We would expect

-Refer to the above figure.A price support set at will

Which of the following statements about markets is correct? I.A market helps resources move to their highest-valued uses by means of prices. II.A market encompasses the exchange arrangements of both buyers and sellers.

The price of a good always changes when

-Refer to the above figure.A price ceiling has been set at ,and a black market has opened.The equilibrium black market quantity will be

An increase in demand and a decrease in supply will lead to an

-Refer to the above figure.A price control has been set which has led to a surplus.This means that a

Which of the following is a main characteristic of exchanges in the market system?

If the government sets a minimum price at which a good or service can be sold,it thereby creates

-Refer to the above figure.If the government imposes a price ceiling of $20,

What are the effects of an increase in the minimum wage? Who would be most affected?

-Refer to the above figure.Suppose the demand curve shifts from DA to DB,while the supply curve remains at SA.Which of the following statements is FALSE?

If supply increases and demand decreases,

Price controls

In New York City,apartment rent can be adjusted only when a tenant leaves.This leads

-Refer to the above figure.Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA.Which of the following is true?

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

The market clearing price of computer modems has just decreased.Which of the following could have caused this change?

Prices play a role in a market

-According to the above figure,if the government imposes a minimum wage equal to Wm,the effect will be

A black market may occur when

People often complain about price gouging after a disaster such as a hurricane.Suppose the government successfully prevented price increases due to the disaster.We would expect

-Refer to the above figure.A price support set at will

Which of the following statements about markets is correct? I.A market helps resources move to their highest-valued uses by means of prices. II.A market encompasses the exchange arrangements of both buyers and sellers.

The price of a good always changes when

-Refer to the above figure.A price ceiling has been set at ,and a black market has opened.The equilibrium black market quantity will be

An increase in demand and a decrease in supply will lead to an

-Refer to the above figure.A price control has been set which has led to a surplus.This means that a

Which of the following is a main characteristic of exchanges in the market system?

If the government sets a minimum price at which a good or service can be sold,it thereby creates

-Refer to the above figure.If the government imposes a price ceiling of $20,

What are the effects of an increase in the minimum wage? Who would be most affected?

-Refer to the above figure.Suppose the demand curve shifts from DA to DB,while the supply curve remains at SA.Which of the following statements is FALSE?

If supply increases and demand decreases,

Price controls

In New York City,apartment rent can be adjusted only when a tenant leaves.This leads

-Refer to the above figure.Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA.Which of the following is true?

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