Question 1

Effective price floors prevent the market price from falling to reach equilibrium.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Figure 4.5 below to answer the questions that follow.   Figure 4.5
-Refer to Figure 4.5. Assume that initially there is free trade. The quantity demanded of CD-Rom drives will be reduced by 3 million CD-Rom drives if the United States imposes ________ tax per CD-Rom drive on imported CD-Rom drives.

Accepted Answer

A)  no 
B)  a $10 
C)  a $15 
D)  a $25 
A)  no 
B)  a $10 
C)  a $15 
D)  a $25

Question 3

Nonprice rationing will happen whenever there is excess supply in a market.

Accepted Answer

A) True 
 B)False

Question 4

The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

Accepted Answer

A)  using rationing coupons that cannot be resold. 
B)  using rationing on a first-come, first-served basis. 
C)  using rationing coupons that can be resold. 
D)  that no rationing system will be necessary. 
A)  using rationing coupons that cannot be resold. 
B)  using rationing on a first-come, first-served basis. 
C)  using rationing coupons that can be resold. 
D)  that no rationing system will be necessary.

Question 5

Related to the Economics in Practice on p. 77: If the supply of generators increases and the demand for generators increases, the equilibrium price for generators ________ and the equilibrium quantity of generators ________.

Accepted Answer

A)  will increase; will decrease 
B)  will increase; may increase, decrease, or stay the same 
C)  may increase, decrease, or stay the same; will increase 
D)  may increase; decrease, or stay the same; may increase, decrease, or stay the same 
A)  will increase; will decrease 
B)  will increase; may increase, decrease, or stay the same 
C)  may increase, decrease, or stay the same; will increase 
D)  may increase; decrease, or stay the same; may increase, decrease, or stay the same

Question 6

Queuing is a system of nonprice rationing.

Accepted Answer

A) True 
 B)False

Question 7

An example of an ineffective price ceiling would be the government setting the maximum price of wheat at ________ per bushel when the market price is at $5.00 per bushel.

Accepted Answer

A)  $2.25 
B)  $3.00 
C)  $4.75 
D)  $6.00 
A)  $2.25 
B)  $3.00 
C)  $4.75 
D)  $6.00

Question 8

The price system

Accepted Answer

A)  automatically distributes scarce goods. 
B)  is inefficient. 
C)  requires government help to allocate goods. 
D)  is the only way to allocate goods. 
A)  automatically distributes scarce goods. 
B)  is inefficient. 
C)  requires government help to allocate goods. 
D)  is the only way to allocate goods.

Question 9

The price system ultimately determines the allocation of resources among producers.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the information provided in Figure 4.6 below to answer the questions that follow.
Equilibrium in this market occurs at the intersection of curves S and D.   Figure 4.6
-Refer to Figure 4.6. If price goes from equilibrium to P1, producer surplus changes by the area

Accepted Answer

A)  E - C. 
B)  C + E 
C)  E + F. 
D)  B - F. 
A)  E - C. 
B)  C + E 
C)  E + F. 
D)  B - F.

Question 11

Related to the Economics in Practice on p. 81: The initial price of $0 for the Shakespeare in the Park tickets is akin to the city of New York ________ the tickets.

Accepted Answer

A)  issuing a price floor on 
B)  issuing a price ceiling on 
C)  issuing ration coupons for 
D)  assigning favored customer status for 
A)  issuing a price floor on 
B)  issuing a price ceiling on 
C)  issuing ration coupons for 
D)  assigning favored customer status for

Question 12

Refer to the information provided in Figure 4.6 below to answer the questions that follow.
Equilibrium in this market occurs at the intersection of curves S and D.   Figure 4.6
-Refer to Figure 4.6. If price goes from equilibrium to P1, consumer surplus changes by the area

Accepted Answer

A)  E - C. 
B)  C + E. 
C)  E + F. 
D)  B - F. 
A)  E - C. 
B)  C + E. 
C)  E + F. 
D)  B - F.

Question 13

If the market price of a basketball is $35 and the full cost of producing it is $20, then a basketball producing firm gets producer surplus of

Accepted Answer

A)  1 basketball. 
B)  $35. 
C)  $20. 
D)  $15. 
A)  1 basketball. 
B)  $35. 
C)  $20. 
D)  $15.

Question 14

4.2 Supply and Demand Analysis: An Oil Import Fee
Refer to the information provided in Figure 4.4 below to answer the questions that follow.   Figure 4.4
-Refer to Figure 4.4. If the United States levies no taxes on imported oil, which of the following would occur?

Accepted Answer

A)  The price of oil in the United States would fall to $100 per barrel, and the United States would import 10 million barrels of oil per day. 
B)  The price of oil in the United States would be $125 per barrel, and the United States would import 6 million barrels of oil per day. 
C)  The price of oil in the United States would be $150 per barrel, and the United States would import 2 million barrels of oil per day. 
D)  The price of oil in the United States after the U.S. government eliminated all taxes on imported oil cannot be determined from this information. 
A)  The price of oil in the United States would fall to $100 per barrel, and the United States would import 10 million barrels of oil per day. 
B)  The price of oil in the United States would be $125 per barrel, and the United States would import 6 million barrels of oil per day. 
C)  The price of oil in the United States would be $150 per barrel, and the United States would import 2 million barrels of oil per day. 
D)  The price of oil in the United States after the U.S. government eliminated all taxes on imported oil cannot be determined from this information.

Question 15

If a price ceiling is set below the equilibrium price,

Accepted Answer

A)  quantity demanded will equal quantity supplied. 
B)  there will be a surplus. 
C)  there will be a shortage. 
D)  demand will be less than supply. 
A)  quantity demanded will equal quantity supplied. 
B)  there will be a surplus. 
C)  there will be a shortage. 
D)  demand will be less than supply.

Question 16

Refer to the information provided in Figure 4.3 below to answer the questions that follow.   Figure 4.3
-Refer to Figure 4.3. In the market for pencils, the quantity demanded will be greater than the quantity supplied if the government imposes an effective

Accepted Answer

A)  price floor. 
B)  price ceiling. 
C)  market equilibrium price. 
D)  price surplus. 
A)  price floor. 
B)  price ceiling. 
C)  market equilibrium price. 
D)  price surplus.

Question 17

Refer to the information provided in Figure 4.3 below to answer the questions that follow.   Figure 4.3
-Refer to Figure 4.3. At an effective price ceiling for pencils,

Accepted Answer

A)  quantity demanded is greater than quantity supplied. 
B)  quantity demanded is less than quantity supplied. 
C)  quantity demanded is equal to quantity supplied. 
D)  price is above equilibrium. 
A)  quantity demanded is greater than quantity supplied. 
B)  quantity demanded is less than quantity supplied. 
C)  quantity demanded is equal to quantity supplied. 
D)  price is above equilibrium.

Question 18

If the most someone is willing to pay for an airline ticket to Las Vegas is $300 and the market price of the ticket is $200, then this buyer will get consumer surplus of

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $500. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $500.

Question 19

Refer to the information provided in Figure 4.1 below to answer the questions that follow.   Figure 4.1
-Refer to Figure 4.1. Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple,

Accepted Answer

A)  the quantity of apples demanded will be reduced by 2 million apples per day. 
B)  the quantity of apples supplied by U.S. firms will increase by 2 million apples per day. 
C)  the price of apples in the United States will increase to 40 cents per apple. 
D)  all of the above 
A)  the quantity of apples demanded will be reduced by 2 million apples per day. 
B)  the quantity of apples supplied by U.S. firms will increase by 2 million apples per day. 
C)  the price of apples in the United States will increase to 40 cents per apple. 
D)  all of the above

Question 20

Producer surplus is

Accepted Answer

A)  the difference between the maximum a person is willing to pay and current market price. 
B)  the difference between current market price and full costs of production for the firm. 
C)  the difference between willingness to sell and full costs of productions for the firm. 
D)  current market price. 
A)  the difference between the maximum a person is willing to pay and current market price. 
B)  the difference between current market price and full costs of production for the firm. 
C)  the difference between willingness to sell and full costs of productions for the firm. 
D)  current market price.

Effective price floors prevent the market price from falling to reach equilibrium.

Nonprice rationing will happen whenever there is excess supply in a market.

The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

Related to the Economics in Practice on p. 77: If the supply of generators increases and the demand for generators increases, the equilibrium price for generators and the equilibrium quantity of generators .

Queuing is a system of nonprice rationing.

An example of an ineffective price ceiling would be the government setting the maximum price of wheat at ________ per bushel when the market price is at $5.00 per bushel.

The price system

The price system ultimately determines the allocation of resources among producers.

Refer to the information provided in Figure 4.6 below to answer the questions that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. If price goes from equilibrium to P1, producer surplus changes by the area

Related to the Economics in Practice on p. 81: The initial price of $0 for the Shakespeare in the Park tickets is akin to the city of New York ________ the tickets.

Refer to the information provided in Figure 4.6 below to answer the questions that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. If price goes from equilibrium to P1, consumer surplus changes by the area

If the market price of a basketball is $35 and the full cost of producing it is $20, then a basketball producing firm gets producer surplus of

4.2 Supply and Demand Analysis: An Oil Import Fee Refer to the information provided in Figure 4.4 below to answer the questions that follow. Figure 4.4 -Refer to Figure 4.4. If the United States levies no taxes on imported oil, which of the following would occur?

If a price ceiling is set below the equilibrium price,

Refer to the information provided in Figure 4.3 below to answer the questions that follow. Figure 4.3 -Refer to Figure 4.3. In the market for pencils, the quantity demanded will be greater than the quantity supplied if the government imposes an effective

Refer to the information provided in Figure 4.3 below to answer the questions that follow. Figure 4.3 -Refer to Figure 4.3. At an effective price ceiling for pencils,

If the most someone is willing to pay for an airline ticket to Las Vegas is $300 and the market price of the ticket is $200, then this buyer will get consumer surplus of

Refer to the information provided in Figure 4.1 below to answer the questions that follow. Figure 4.1 -Refer to Figure 4.1. Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple,

Producer surplus is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 4: Demand and Supply Applications

Effective price floors prevent the market price from falling to reach equilibrium.

Nonprice rationing will happen whenever there is excess supply in a market.

The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

Related to the Economics in Practice on p. 77: If the supply of generators increases and the demand for generators increases, the equilibrium price for generators ________ and the equilibrium quantity of generators ________.

Queuing is a system of nonprice rationing.

An example of an ineffective price ceiling would be the government setting the maximum price of wheat at ________ per bushel when the market price is at $5.00 per bushel.

The price system

The price system ultimately determines the allocation of resources among producers.

Refer to the information provided in Figure 4.6 below to answer the questions that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. If price goes from equilibrium to P1, producer surplus changes by the area

Related to the Economics in Practice on p. 81: The initial price of $0 for the Shakespeare in the Park tickets is akin to the city of New York ________ the tickets.

Refer to the information provided in Figure 4.6 below to answer the questions that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. If price goes from equilibrium to P1, consumer surplus changes by the area

If the market price of a basketball is $35 and the full cost of producing it is $20, then a basketball producing firm gets producer surplus of

4.2 Supply and Demand Analysis: An Oil Import Fee Refer to the information provided in Figure 4.4 below to answer the questions that follow. Figure 4.4 -Refer to Figure 4.4. If the United States levies no taxes on imported oil, which of the following would occur?

If a price ceiling is set below the equilibrium price,

Refer to the information provided in Figure 4.3 below to answer the questions that follow. Figure 4.3 -Refer to Figure 4.3. In the market for pencils, the quantity demanded will be greater than the quantity supplied if the government imposes an effective

Refer to the information provided in Figure 4.3 below to answer the questions that follow. Figure 4.3 -Refer to Figure 4.3. At an effective price ceiling for pencils,

If the most someone is willing to pay for an airline ticket to Las Vegas is $300 and the market price of the ticket is $200, then this buyer will get consumer surplus of

Refer to the information provided in Figure 4.1 below to answer the questions that follow. Figure 4.1 -Refer to Figure 4.1. Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple,

Producer surplus is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Related to the Economics in Practice on p. 77: If the supply of generators increases and the demand for generators increases, the equilibrium price for generators and the equilibrium quantity of generators .