Question 1

Use the following to answer questions 
Figure: The Market for Economics Textbooks 
-(Figure: The Market for Economics Textbooks) Look at the figure The Market for Economics Textbooks. At a price ceiling of $40, the market outcome would be a _____ of _____ textbooks.

Accepted Answer

A)   surplus; 30
B)   surplus; 10
C)   shortage; 30
D)   shortage; 10 C

Question 2

Rent controls set a price ceiling below the equilibrium price, and therefore:

Accepted Answer

A)   quantity supplied exceeds the quantity demanded.
B)   quantity demanded exceeds the quantity supplied.
C)   a surplus of rental units will result.
D)   all poor people will be helped. B

Question 3

Use the following to answer questions 
Figure: Supply and Demand in Agriculture 
-(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. The government could help increase farmers' income by setting a price _____ at _____, causing a _____ of _____.

Accepted Answer

A)   floor; P4; surplus; Q3 - Q0
B)   floor; P2; surplus; Q2 - Q0
C)   ceiling; P4; surplus; Q2 - Q1
D)   floor; P1; shortage; Q3 - Q0 A

Question 4

Which of the following statements is (are) TRUE? I. Quantity controls drive a wedge between the demand price and the supply price of the good.
II) The difference between the demand price and the supply price at the quota limit is consumer surplus.
III) Quantity controls have no undesirable side effects.

Accepted Answer

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

Question 5

A binding price ceiling is designed to:

Accepted Answer

A)   keep prices below the equilibrium level.
B)   increase the quality of the good.
C)   prevent shortages.
D)   increase efficiency.

Question 6

How does an effective price ceiling affect the quantity demanded and the quantity supplied in a competitive market?

Accepted Answer

The answer of How does an effective price ceiling affect...

Question 7

If minimum wages are set above the equilibrium wage in the market, then the number of workers hired will be _____ the number of people who are willing to work.

Accepted Answer

A)   less than
B)   greater than
C)   equal to
D)   less than, greater than, or equal to

Question 8

The government decides to impose a price ceiling on a good because it thinks the market-determined price is too high. If the government imposes the price ceiling below the equilibrium price:

Accepted Answer

A)   consumers will respond to the lower price and wish to purchase more of the good than at the equilibrium price.
B)   producers will respond to the lower price and offer more units for sale.
C)   consumers will be able to purchase more of the good after the price ceiling is imposed.
D)   it will not be binding.

Question 9

In a(n) _____ market goods or services are bought and sold illegally.

Accepted Answer

A)   black
B)   uncontrolled
C)   unregulated
D)   unproductive

Question 10

Quotas, price ceilings, and price floors are all types of quantity controls that the government may impose.

Accepted Answer

A) True 
 B)False

Question 11

Producers will supply an inefficiently low quality of a good if the government imposes:

Accepted Answer

A)   a price control.
B)   an excise tax.
C)   a binding price floor.
D)   a binding price ceiling.

Question 12

A rent control scheme setting a maximum amount of rent paid below the equilibrium rental price would most likely be supported by:

Accepted Answer

A)   people who wish to rent such an apartment.
B)   people who own rental apartments.
C)   both renters and owners.
D)   neither renters nor owners.

Question 13

Hugo Chávez was the president of Venezuela. Venezuela is a major producer of oil products, which remain the keystone of Venezuela's economy. Suppose President Chávez wanted to increase his popularity with the citizens of Venezuela and enacted a government policy to reduce the price of gasoline sold at state-owned gas stations to 50% of the previous price. Assuming a downward-sloping demand curve for gasoline, in theory, this policy would result in the quantity of gasoline demanded to be _____ the quantity of gasoline supplied.

Accepted Answer

A)   equal to
B)   greater than
C)   less than
D)   greater than or equal to

Question 14

Use the following to answer questions 
Figure: Rent Controls 
-(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent1:

Accepted Answer

A)   the shortage of rental units is the distance Q3 - Q1.
B)   some renters will be willing to pay a price as high as Rent4 for Q1 units.
C)   no one will have to pay a higher actual price than Rent0, nor will anyone be willing to do so.
D)   there will be a surplus of rental units, but it is impossible to tell how large the surplus is based on the information provided.

Question 15

Use the following to answer questions 
-(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda demanded will be:

Accepted Answer

A)   10 cans.
B)   8 cans.
C)   6 cans.
D)   4 cans.

Question 16

An upper limit on the quantity of a good that can be bought and sold is a:

Accepted Answer

A)   quota limit.
B)   price ceiling.
C)   price floor.
D)   tariff.

Question 17

A binding price floor is a _____ set _____ the equilibrium price.

Accepted Answer

A)   minimum price; at
B)   maximum price; below
C)   minimum price; above
D)   maximum price; above

Question 18

The quota rent is the same thing as deadweight loss.

Accepted Answer

A) True 
 B)False

Question 19

The amount that consumers are willing to pay for the quota limit quantity is the:

Accepted Answer

A)   demand price.
B)   supply price.
C)   quota rent.
D)   price ceiling.

Question 20

The persistent unwanted surplus that results from a price floor causes inefficiencies that include all of the following EXCEPT:

Accepted Answer

A)   inefficiently low quality.
B)   inefficient allocation of sales among sellers.
C)   wasted resources.
D)   the temptation to break the law by selling below the legal price.

Exam 5: Price Controls and Quotas- Meddling With Markets

Use the following to answer questions Figure: The Market for Economics Textbooks -(Figure: The Market for Economics Textbooks) Look at the figure The Market for Economics Textbooks. At a price ceiling of $40, the market outcome would be a _ of _ textbooks.

Rent controls set a price ceiling below the equilibrium price, and therefore:

Use the following to answer questions Figure: Supply and Demand in Agriculture -(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. The government could help increase farmers' income by setting a price ___ at _, causing a _ of ___.

A binding price ceiling is designed to:

How does an effective price ceiling affect the quantity demanded and the quantity supplied in a competitive market?

If minimum wages are set above the equilibrium wage in the market, then the number of workers hired will be _____ the number of people who are willing to work.

The government decides to impose a price ceiling on a good because it thinks the market-determined price is too high. If the government imposes the price ceiling below the equilibrium price:

In a(n) _____ market goods or services are bought and sold illegally.

Quotas, price ceilings, and price floors are all types of quantity controls that the government may impose.

Producers will supply an inefficiently low quality of a good if the government imposes:

A rent control scheme setting a maximum amount of rent paid below the equilibrium rental price would most likely be supported by:

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent₁:

Use the following to answer questions -(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda demanded will be:

An upper limit on the quantity of a good that can be bought and sold is a:

A binding price floor is a _ set _ the equilibrium price.

The quota rent is the same thing as deadweight loss.

The amount that consumers are willing to pay for the quota limit quantity is the:

The persistent unwanted surplus that results from a price floor causes inefficiencies that include all of the following EXCEPT:

Exam 5: Price Controls and Quotas- Meddling With Markets

Use the following to answer questions Figure: The Market for Economics Textbooks -(Figure: The Market for Economics Textbooks) Look at the figure The Market for Economics Textbooks. At a price ceiling of $40, the market outcome would be a _____ of _____ textbooks.

Rent controls set a price ceiling below the equilibrium price, and therefore:

Use the following to answer questions Figure: Supply and Demand in Agriculture -(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. The government could help increase farmers' income by setting a price _____ at _____, causing a _____ of _____.

A binding price ceiling is designed to:

How does an effective price ceiling affect the quantity demanded and the quantity supplied in a competitive market?

If minimum wages are set above the equilibrium wage in the market, then the number of workers hired will be _____ the number of people who are willing to work.

The government decides to impose a price ceiling on a good because it thinks the market-determined price is too high. If the government imposes the price ceiling below the equilibrium price:

In a(n) _____ market goods or services are bought and sold illegally.

Quotas, price ceilings, and price floors are all types of quantity controls that the government may impose.

Producers will supply an inefficiently low quality of a good if the government imposes:

A rent control scheme setting a maximum amount of rent paid below the equilibrium rental price would most likely be supported by:

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent1:

Use the following to answer questions -(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $1 per can of soda, the quantity of soda demanded will be:

An upper limit on the quantity of a good that can be bought and sold is a:

A binding price floor is a _____ set _____ the equilibrium price.

The quota rent is the same thing as deadweight loss.

The amount that consumers are willing to pay for the quota limit quantity is the:

The persistent unwanted surplus that results from a price floor causes inefficiencies that include all of the following EXCEPT:

Use the following to answer questions Figure: The Market for Economics Textbooks -(Figure: The Market for Economics Textbooks) Look at the figure The Market for Economics Textbooks. At a price ceiling of $40, the market outcome would be a _ of _ textbooks.

Use the following to answer questions Figure: Supply and Demand in Agriculture -(Figure: Supply and Demand in Agriculture) Look at the figure Supply and Demand in Agriculture. The government could help increase farmers' income by setting a price ___ at _, causing a _ of ___.

Use the following to answer questions Figure: Rent Controls -(Figure: Rent Controls) Look at the figure Rent Controls. If rent controls are set at Rent₁:

A binding price floor is a _ set _ the equilibrium price.