Deck 4: Market Efficiency

Question 1

Holding all else constant,when the price of a good increases:

A) consumer surplus increases.
B) producer surplus decreases.
C) both producer surplus and consumer surplus increase.
D) both consumer surplus and producer surplus decrease.
E) consumer surplus decreases.

Answer 1

consumer surplus decreases.

Question 2

Bob is willing to pay $65 for a new pair of shoes.Bill is willing to pay $50 for the same shoes.The shoes have a price of $45.What is the total consumer surplus for Bob and Bill?

A) $15
B) $20
C) $5
D) $25
E) $35

Answer 2

$25

Question 3

When looking at a graph,the area under the demand curve and above market price is defined as:

A) tax revenue.
B) spending surplus.
C) consumer benefit.
D) producer surplus.
E) consumer surplus.

Answer 3

consumer surplus.

Question 4

What happens to the amount of consumer surplus and producer surplus when the supply of scarves suddenly declines (shifts left)?

A) Producer surplus declines and consumer surplus is unchanged.
B) Consumer surplus declines and producer surplus is unchanged.
C) Consumer surplus declines and producer surplus declines.
D) Consumer surplus is unchanged and producer surplus is unchanged.
E) Producer surplus increases and consumer surplus increases.

Question 5

MJM Products,Inc.,designs and sells flannel jackets.The company is willing to sell a men's flannel jacket for as little as $45.Its main competitor is RL Outriggers,which is willing to sell the same men's flannel jacket for as little as $40.The current market price of that type of jacket is $57.What is the total producer surplus for the two firms?

A) $95
B) $12
C) $17
D) $29
E) $5

Question 6

Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Jeff and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.How much is total producer surplus in this market?

A) $0.15
B) $8.15
C) $0.85
D) $1.00
E) $1.85

Question 7

Consumer surplus is the difference between:

A) supply and demand.
B) the price the producer receives and the willingness to sell a good.
C) the willingness to pay for a good and the willingness to sell a good.
D) the willingness to pay for a good and the amount that is paid to get it.
E) the price paid for a good and the amount of the good produced.

Question 8

All else being held constant,an increase in the price of a good would necessarily:

A) increase social welfare.
B) decrease producer surplus.
C) decrease consumer surplus.
D) increase consumer surplus.
E) increase the supply of the good.

Question 9

Muddy's Bakery and Lilly's Sweetshop both sell cupcakes.The market price of one chocolate cupcake is $2.50.Muddy's is willing to sell a cupcake for as little as $1.65; Lilly's is willing to sell a cupcake for as little as $1.75.What is the total producer surplus for the two firms?

A) $0.75
B) $1.60
C) $0.85
D) $2.50
E) $3.40

Question 10

When looking at a graph,the area above the supply curve and below market price is defined as:

A) consumer surplus.
B) producer surplus.
C) producer benefit.
D) business profit.
E) revenue.

Question 11

When looking at a supply and demand graph,you would find producer surplus:

A) above the demand curve and below the supply curve.
B) below the demand curve and above market price.
C) to the right of equilibrium quantity and above market price.
D) above the demand curve and above the supply curve.
E) below market price and above the supply curve.

Question 12

When looking at a supply and demand graph,you would find consumer surplus:

A) above the demand curve and below the supply curve.
B) below the demand curve and above market price.
C) to the right of equilibrium quantity and above market price.
D) above the demand curve and above the supply curve.
E) below market price and above the supply curve.

Question 13

Producer surplus is depicted by the area:

A) above market price and below the supply curve.
B) between the supply curve and the demand curve.
C) below market price and above the supply curve.
D) above market price and below the demand curve.
E) above the demand curve and below the supply curve.

Question 14

Jamal is willing to pay $85 for a new jacket that sells for $70.Eddie is willing to pay $65 for that same jacket.What is the total consumer surplus for Jamal and Eddie?

A) $30
B) $15
C) $20
D) $25
E) $155

Question 15

Holding all else constant,when the price of a good decreases:

A) producer surplus increases.
B) consumer surplus increases.
C) both consumer surplus and producer surplus increase.
D) consumer surplus decreases.
E) both consumer surplus and producer surplus decrease.

Question 16

Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Jeff and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.How much is total consumer surplus in this market?

A) $2.25
B) $3.00
C) $0.75
D) $5.25
E) $15.25

Question 17

Consumer surplus is defined as the:

A) difference between the willingness to pay for a good and the willingness to sell it.
B) total revenue earned from producing and selling some good.
C) difference between the willingness to pay for a good and the price paid to get it.
D) quantity of units that consumers want to buy at the market price.
E) difference between the price the seller receives and the willingness to sell it.

Question 18

Why do government leaders impose price controls?

A) They are trying to promote the formation of black markets.
B) They are trying to ensure that the market reaches equilibrium.
C) They are trying to ensure that all consumers are able to purchase a specific product.
D) They are trying to ensure that a social goal is satisfied.
E) They are trying to increase the demand curve.

Question 19

The difference between the willingness to pay for a good and the amount that is paid to get it is also known as:

A) consumer expenditure.
B) surplus spending.
C) consumer benefit.
D) producer profit.
E) consumer surplus.

Question 20

When the price of a good increases and all else is held constant:

A) both consumer surplus and producer surplus decrease.
B) both consumer surplus and producer surplus increase.
C) consumer surplus decreases.
D) producer surplus decreases.
E) producer surplus increases.

Question 21

A market has reached an efficient outcome when:

A) producers are able to produce and sell as much as they like.
B) total surplus is minimized.
C) producer surplus is greater than consumer surplus.
D) consumers are able to purchase as much as they like.
E) total surplus is maximized.

Question 22

If you were a politician,why would you find it difficult to remove a binding price ceiling?

A) because it greatly benefits firms, and they would spend a lot of money to lobby against the law's repeal
B) because it greatly benefits government, which receives additional tax revenue as a result
C) because it greatly benefits all consumers, and they are also voters
D) because it greatly benefits some consumers who are also voters
E) because it greatly benefits society as a whole, with all consumers able to buy as much as firms produce

Question 23

Why are binding price ceiling laws passed?

A) They make goods more expensive (and profitable) for firms.
B) They encourage sellers to produce more of a good.
C) They encourage producers to sell higher-quality products.
D) They permit customers to obtain higher-quality products.
E) They make a good less expensive for those customers who are able to purchase the good in the legal market.

Question 24

Why do shortages develop under a binding price ceiling?

A) It encourages sellers to produce more of the product.
B) It encourages buyers to purchase less of the product.
C) It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
D) It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market.
E) It encourages sellers to increase the quality of the product they sell, which, in turn, increases the quantity demanded.

Question 25

Producer surplus is defined as the:

A) difference between the willingness to pay for a good and the willingness to sell it.
B) difference between the price the seller receives and the willingness to sell it.
C) difference between the willingness to pay for a good and the price paid to get it.
D) quantity of units that consumers want to buy at the market price.
E) total revenue earned from producing and selling some good.

Question 26

When the price of a good decreases and all else is held constant:

A) producer surplus increases.
B) both consumer surplus and producer surplus decrease.
C) both consumer surplus and producer surplus increase.
D) producer surplus decreases.
E) consumer surplus decreases.

Question 27

Producer surplus is the difference between:

A) supply and demand.
B) the price the producer receives and the willingness to sell a good.
C) the willingness to pay for a good and the willingness to sell a good.
D) the willingness to pay for a good and the amount that is paid to get it.
E) the price paid for a good and the amount of the good produced.

Question 28

What consequences will a binding price ceiling have?

A) There will be downward pressure on prices until quantity demanded equals quantity supplied.
B) There will be upward pressure on prices until quantity demanded equals quantity supplied.
C) There are no consequences to a binding price ceiling.
D) The quantity demanded will always exceed the quantity supplied.
E) The quantity demanded will always be smaller than the quantity supplied.

Question 29

The difference between the willingness to sell a good and the price a producer receives is also known as:

A) producer profit.
B) producer surplus.
C) consumer waste.
D) revenue.
E) producer benefit.

Question 30

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

A) minimum wage law.
B) fair wage law.
C) price ceiling.
D) black market price.
E) ration price.

Question 31

If a store is able to sell a good at the market price,even though the government authorities have set the minimum price that can be charged,the store is selling the good in a(n):

A) black market for a market price that is higher.
B) black market for a market price that is lower.
C) effort to eliminate a surplus of the good.
D) legal market for a market price that is higher.
E) legal market for a market price that is lower.

Question 32

Setting a price ceiling below the equilibrium price can result in:

A) a surplus, where the quantity demanded exceeds the quantity supplied.
B) a shortage, where the quantity demanded exceeds the quantity supplied.
C) a surplus, where the quantity supplied exceeds the quantity demanded.
D) a shortage, where the quantity supplied exceeds the quantity demanded.
E) no impact on the quantity demanded or on the quantity supplied.

Question 33

What will happen in a market where a binding price ceiling is removed?

A) There will be downward pressure on the price in the legal market.
B) The products sold will improve in quality and become more plentiful.
C) Sellers will face a reduced incentive to sell the product.
D) Buyers will find the good more difficult to obtain in the legal market.
E) There will be increased pressure to buy and sell the good on the black market.

Question 34

Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Jeff and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.What is the total surplus (i.e.,producer and consumer surplus)in this market?

A) $7.10
B) $5.25
C) $1.85
D) $23.40
E) $4.50

Question 35

All else held constant,a decrease in the price of a good would necessarily:

A) increase social well-being.
B) decrease producer surplus.
C) decrease consumer surplus.
D) increase demand for the good.
E) increase producer surplus.

Question 36

A black market is an illegal market that emerges when:

A) binding and non-binding price controls are in place.
B) binding price ceilings are in place.
C) binding price floors are in place.
D) only binding price ceilings and binding price floors are in place.
E) no price controls are present.

Question 37

Do all buyers benefit from a binding price ceiling?

A) Yes.A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market.
B) No.A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market.
C) No.A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products.
D) No.A binding price ceiling benefits only some buyers because, although the price is initially lower, it eventually increases to the equilibrium price.
E) No.A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium.

Question 38

Many states have laws that limit the maximum amount of interest that a lender can charge a borrower.Such a law is an example of a(n):

A) equilibrium price.
B) price ceiling.
C) price floor.
D) black market price.
E) ration price.

Question 39

The price-quantity combination found where the supply and demand curves intersect is a unique combination that is efficient because:

A) producers can sell as much as they want.
B) total surplus is maximized.
C) revenue is sufficient to pay for business costs.
D) consumers can buy as much as they want.
E) new products are being introduced.

Question 40

If a store is able to sell a good at the market price,even though the government authorities have set the maximum price that can be charged for it,the store is selling the good in a(n):

A) black market for a market price that is higher.
B) black market for a market price that is lower.
C) effort to eliminate a surplus of the good.
D) legal market for a market price that is higher.
E) legal market for a market price that is lower.

Question 41

Which of the following is an accurate statement about the consequence of a binding price ceiling?

A) Binding price ceilings do not allow consumers to pay a lower price for the product in the legal market.
B) Binding price ceilings encourage the formation of a black market.
C) Binding price ceilings discourage the formation of a black market.
D) Binding price ceilings create a surplus of the product.
E) Binding price ceilings cause consumers to purchase more of the product in the legal market.

Question 42

Refer to the accompanying figure to answer the questions that follow.

If there is a $60 price ceiling imposed on a textbook,what will be the disequilibrium amount?

A) There will be a shortage of 800,000 textbooks.
B) There will be a surplus of 800,000 textbooks.
C) There will be neither a shortage nor a surplus.
D) There will be a shortage of 2.6 million textbooks.
E) There will be a shortage of 400,000 textbooks.

Question 43

Refer to the accompanying table to answer the questions that follow.

If rent control is established at $1,750,what would be the amount of disequilibrium in the apartment market?

A) There would be a shortage of 23,500 apartments.
B) There would be a surplus of 23,500 apartments that is reduced, over time, as individuals rent apartments in the illegal black market.
C) There would be neither a shortage nor a surplus.
D) There would be a surplus of 23,500 apartments that is eliminated through individuals renting apartments in the illegal black market.
E) There would be a surplus of 23,500 apartments that increases as houses and condominiums are converted into apartments.

Question 44

If a price ceiling is imposed at $15 per unit when the equilibrium market price is $12,there will be:

A) no surplus or shortage.
B) a surplus.
C) a shortage.
D) a downward pressure on prices.
E) an upward pressure on prices.

Question 45

One strategy I might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments.What will happen if I get elected and am able to pass such a law?

A) The price ceiling will increase the number of apartments available for rent.
B) The price ceiling will cause the demand curve to shift.
C) The price ceiling will cause the supply curve to shift.
D) The price ceiling will decrease the number of students who want to rent an apartment.
E) The price ceiling will cause students to sleep in their cars or to move in with their friends because they will not be able to find a place to live.

Question 46

Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market experience its largest shortage?

A) $1,500
B) $1,550
C) $1,700
D) $1,750
E) $1,800

Question 47

Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market experience its largest surplus?

A) $1,500
B) $1,550
C) $1,700
D) $1,750
E) $1,800

Question 48

Refer to the accompanying figure to answer the questions that follow.

The market is currently at market equilibrium.If a binding price ceiling of P₁ is imposed,by how much would the quantity supplied change?

A) It would increase by 32,000 units.
B) It would decrease by 18,000 units.
C) It would decrease by 30,500 units.
D) It would decrease by 30,000 units.
E) It would decrease by 32,000 units.

Question 49

What is the amount of the shortage or surplus in the market for public transportation when the price ceiling is $1.75?

A) 100,000
B) 86,000
C) 75,000
D) 40,000
E) 0 (zero)

Question 50

Refer to the accompanying table to answer the questions that follow.

If rent control is established at $1,550,what would be the amount of disequilibrium in the apartment market?

A) There would be a shortage of 28,990 apartments.
B) There would be a surplus of 28,990 apartments that is reduced, over time, as individuals rent apartments in the illegal black market.
C) There would be neither a shortage nor a surplus.
D) There would be a surplus of 28,990 apartments that is eliminated through individuals renting apartments in the illegal black market.
E) There would be a surplus of 28,990 apartments that increases as houses and condominiums are converted into apartments.

Question 51

Refer to the accompanying figure to answer the questions that follow.

If there is a $180 price ceiling imposed on a textbook,what will be the disequilibrium amount?

A) There will be a shortage of 1.5 million units.
B) There will be a shortage of 800,000 units.
C) There will not be a shortage.
D) There will be a shortage of 3 million units.
E) There will be a shortage of 450,000 units.

Question 52

Refer to the accompanying figure to answer the questions that follow.

At the price of the binding price floor,by how much would the quantity supplied change from the market equilibrium?

A) The quantity supplied would increase by 32,000 units.
B) The quantity supplied would decrease by 18,000 units.
C) The quantity supplied would decrease by 30,500 units.
D) The quantity supplied would increase by 30,500 units.
E) The quantity supplied would decrease by 32,000 units.

Question 53

Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market reach equilibrium?

A) $1,500
B) $1,550
C) $1,600
D) $1,650
E) $1,700

Question 54

What will happen in a market where a non-binding price ceiling is removed?

A) There will be downward pressure on the price in the legal market.
B) The products sold will improve in quality and become more plentiful.
C) Sellers will face a reduced incentive to sell the product.
D) The price and quantity will not change in the legal market.
E) There will be increased pressure to buy and sell the good on the black market.

Question 55

Refer to the accompanying figure to answer the questions that follow.

The market is currently at market equilibrium.If a binding price ceiling of P₁ is imposed,by how much would the quantity demanded change?

A) It would increase by 12,000 units.
B) It would decrease by 30,500 units.
C) It would decrease by 12,000 units.
D) It would increase by 30,500 units.
E) It would increase by 30,000 units.

Question 56

Use the following table to answer the questions that follow.

If the price ceiling for corn is $2.50,what amount and type of disequilibrium would be present in the market for corn?

A) There would be neither a shortage nor a surplus.
B) There would be a surplus of 61,000.
C) There would be a shortage of 61,000.
D) There would be a shortage of 186,000.
E) There would be a shortage of 125,000.

Question 57

Use the following table to answer the questions that follow.

What would be the equilibrium quantity in the market for corn?

A) 223,000
B) 3.50
C) 103,000
D) 200,000
E) 169,000

Question 58

Mortimer loves sushi.He loves sushi so much that he asks his congressional representative to work for passage of a binding price ceiling law.Who would be affected by this law and how?

A) Sellers would benefit from such a law because they would receive a higher price for their product.
B) Consumers would benefit from such a law because prices would be lower and all would be able to purchase sushi cheaply.
C) Consumers would benefit from such a law because the sushi would be made of higher-quality fish, and each serving would be larger than it would have been with no binding price ceiling in place.
D) Some consumers would benefit from such a law because prices for sushi would be lower for those able to buy it in the legal market.
E) Sellers would benefit from such a law because they would be able to sell higher-quality sushi and thus capture a larger share of the market.

Question 59

Which of the following is an accurate statement about the consequence of non-binding price ceilings?

A) They prevent the seller from receiving the equilibrium price.
B) They require the seller to advertise the product at the equilibrium price.
C) They create a surplus in the legal market.
D) They do not change the quantity of goods bought or sold in the legal market.
E) They increase the quantity demanded of the good in question.

Question 60

Use the following table to answer the questions that follow.

What would be the equilibrium price in the market for corn?

A) $2.00
B) $5.00
C) $4.00
D) $3.50
E) $4.50

Question 61

Let's say that you have a friend who was caught illegally buying a good on the black market.When the judge asks you to describe your friend's motivation as a buyer,which of the following would most likely be your reply?

A) My friend bought the good on the black market because a binding price floor had created a shortage in the legal market and my friend really needed the good.
B) My friend bought the good on the black market because a price ceiling caused the price to be lower on the black market.
C) My friend bought the good on the black market because a non-binding price floor had created a shortage on the legal market and my friend really needed the good.
D) My friend bought the good on the black market because a binding price floor made the good too expensive to purchase on the legal market and it was cheaper on the black market.
E) My friend bought the good on the black market because a non-binding price floor made the good too expensive to purchase on the legal market and it was cheaper on the black market.

Question 62

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a binding price ceiling on most products?

A) Prices in the legal market in the community with a binding price ceiling will rise.
B) Prices in the legal market in the community with a binding price ceiling will fall.
C) There will be shortages in the community with a binding price ceiling.
D) More consumers will purchase the product in the community with the price ceiling.
E) The black market in your community will be larger than the black market in the community with the binding price ceiling.

Question 63

What is the incentive to create a black market when a binding price floor exists?

A) A black market emerges because buyers are frustrated with shortages of the product.
B) A black market emerges because sellers have an incentive to charge a higher price on the illegal market.
C) A black market emerges because sellers want a market where they can sell higher-quality products.
D) A black market does not emerge; the price will eventually fall to the equilibrium price.
E) A black market emerges because sellers need a way to dispose of surplus product.

Question 64

Why does a shortage that occurs under a binding price ceiling decrease over time?

A) Demand becomes more elastic.
B) Demand becomes more inelastic.
C) Demand and supply both become more elastic.
D) Demand and supply both become more inelastic.
E) Demand becomes more elastic, but supply becomes more inelastic.

Question 65

Use the following information to answer the questions that follow.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
What would be the quantity demanded if a price ceiling is set at $20?

A) 90
B) 45
C) 265
D) 165
E) 305

Question 66

Use the following information to answer the questions that follow.
Market for flat-screen TVs:
Demand: Qd = 2,600 - 5 P
Supply: Qs = -1,000 + 10 P
What would be the quantity demanded if a price ceiling is set at $150?

A) 500
B) 1,850
C) 240
D) 1,350
E) 260

Question 67

Let's say that you have a friend who was caught illegally selling a good on the black market.When the judge asks you to describe your friend's motivation as a seller,which of the following would most likely be your reply?

A) My friend sold the good on the black market because a binding price floor had created a shortage in the legal market and my friend was performing a public service by making the good available.
B) My friend sold the good on the black market because a non-binding price ceiling caused the price to be lower on the black market.
C) My friend sold the good on the black market because a non-binding price floor had created a shortage in the legal market and my friend was performing a public service by making the good available.
D) My friend sold the good on the black market because a non-binding price floor made the good too expensive to purchase in the legal market and it was cheaper on the black market.
E) My friend sold the good on the black market because a binding price floor resulted in a surplus of the product in the legal market and he needed to get rid of the surplus.

Question 68

You would expect there to be many customers for a black market good where:

A) binding price floor is high.
B) binding price floor is low.
C) non-binding price ceiling is high.
D) binding price ceiling is low.
E) binding price ceiling is high.

Question 69

Use the following information to answer the questions that follow.
Market for used cars:
Demand: Qd = 154,000 - 86 P
Supply: Qs = -100 + 14 P
What would be the quantity demanded if a price ceiling is set at $2,000?

A) 100
B) 154,100
C) 1,541
D) 21,474
E) 18,000

Question 70

If a good is subject to a binding price ceiling and you purchase it on the black market,what do you expect to happen to the availability of the good over time?

A) The availability of the good will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.(The shortage of the good will fall.)
B) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will fall.)
C) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will rise.)
D) The availability of the good will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.(The shortage of the good will fall.)
E) The availability of the good will not change over time.

Question 71

What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

A) Both the quality and the size of the product will decrease.
B) The quality of the product will increase but the size of the product will decrease.
C) Both the quality and the size of the product will increase.
D) The quality of the product will decrease but the size of the product will increase.
E) Neither the quality nor the size of the product will be affected.

Question 72

If a good is subject to a binding price ceiling and you purchase it on the black market,what do you expect to happen to the price over time?

A) The black market price will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.
B) The black market price will fall over time as both the supply and demand curves become more inelastic.
C) The black market price will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.
D) The black market price will fall over time as both the supply and demand curves become more elastic.
E) The black market price will not change over time.

Question 73

In some countries,a binding price ceiling is placed on prescription medicines.What would you expect the prescription medicine market to be like in these countries?

A) The legal maximum price would mean that all consumers are able to receive the medicines they need at a price they can afford.
B) The legal maximum price would mean that pharmaceutical companies face an incentive to sell more prescription medicines in that country.
C) The legal maximum price would mean that it is unlikely that an illegal and dangerous black market for prescription drugs will form in that country.
D) The legal maximum price would mean that pharmaceutical companies face an incentive to develop new prescription medicines.
E) The legal maximum price would mean that not all consumers will have access to prescription medicines.

Question 74

What is the incentive to create a black market when a binding price ceiling exists?

A) A black market emerges because sellers have a surplus that they need to sell.
B) A black market emerges because sellers want a market where they can sell lower-quality products.
C) A black market emerges because sellers want a market where they can sell higher-quality products at higher prices.
D) A black market does not emerge because sellers are content to sell at the lower price.
E) A black market emerges because buyers who have a low opportunity cost are seeking out the product.

Question 75

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a non-binding price ceiling on most products?

A) Legal market prices will rise in the community with a binding price ceiling.
B) Legal market prices will fall in the community with a binding price ceiling.
C) The price and the quantity sold in the community without a non-binding price ceiling will be the same as the price and quantity in the community with a non-binding price ceiling.
D) There will be more shortages in the community with a binding price ceiling.
E) The black market in the community with a binding price ceiling will not be strong because consumers will simply purchase the product in the community that has no price ceiling.

Question 76

Use the following information to answer the questions that follow.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
What would be the quantity demanded if a price ceiling is set at $50?

A) 90
B) 35
C) 265
D) 165
E) 75

Question 77

Refer to the accompanying figure.At what price would there be the LEAST pressure to form a black market?

A) $5
B) $8
C) $13
D) $15
E) $20

Question 78

Use the following information to answer the questions that follow.
Market for flat-screen TVs:
Demand: Qd = 2,600 - 5 P
Supply: Qs = -1,000 + 10 P
What would be the quantity demanded if a price ceiling is set at $400?

A) 600
B) 240
C) 0
D) 3,000
E) 2,400

Question 79

Refer to the accompanying figure,which shows both short-run (S₁),and long-run (S₂)demand and supply curves.If there is a $4 binding price ceiling imposed on a pharmaceutical drug,what will be the amount of the disequilibrium in the short run?

A) There will be a shortage of 1.5 million units.
B) There will be a shortage of 800,000 units.
C) There will not be a shortage; there will be a surplus.
D) There will be a shortage of 2 million units.
E) There will be a shortage of 500,000 units.

Question 80

Use the following information to answer the questions that follow.
Market for used cars:
Demand: Qd = 154,000 - 86 P
Supply: Qs = -100 + 14 P
What would be the quantity demanded if a price ceiling is set at $1,000?

A) 500
B) 54,100
C) 68,000
D) 13,900
E) 21,474