Question 1

Exhibit 4-5
  
-Refer to Exhibit 4-5.Suppose the government imposes a price ceiling at P = $0.The result will be a

Accepted Answer

A)  shortage of kidneys equal to (Q3 - Q1). 
B)  surplus of kidneys equal to (Q3 - Q1). 
C)  shortage of kidneys equal to (Q2 - Q1). 
D)  surplus of kidneys equal to (Q2 - Q1). 
A)  shortage of kidneys equal to (Q3 - Q1). 
B)  surplus of kidneys equal to (Q3 - Q1). 
C)  shortage of kidneys equal to (Q2 - Q1). 
D)  surplus of kidneys equal to (Q2 - Q1).

Question 2

Which of the following statements is true?

Accepted Answer

A)  Price ceilings set below the equilibrium price cause shortages. 
B)  Surpluses cause price ceilings to be imposed. 
C)  Neither a price ceiling nor a shortage is the cause of the other. 
D)  Federal law states that price ceilings cannot be imposed for longer than a month. 
A)  Price ceilings set below the equilibrium price cause shortages. 
B)  Surpluses cause price ceilings to be imposed. 
C)  Neither a price ceiling nor a shortage is the cause of the other. 
D)  Federal law states that price ceilings cannot be imposed for longer than a month.

Question 3

If the price of good X is $100 and the price of good Y is $40,it follows that the relative price of one unit of good Y is ___________ unit(s)of good X.

Accepted Answer

A)  0.40 
B)  0.20 
C)  2.50 
D)  4.00 
E)  There is not enough information to answer the question. 
A)  0.40 
B)  0.20 
C)  2.50 
D)  4.00 
E)  There is not enough information to answer the question.

Question 4

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound. If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _______________ and the relative price of butter has _______________.

Accepted Answer

A)  risen; fallen 
B)  fallen; risen 
C)  risen; risen 
D)  fallen; fallen 
A)  risen; fallen 
B)  fallen; risen 
C)  risen; risen 
D)  fallen; fallen

Question 5

It is possible for the absolute price of a good to rise at the same time that the good is becoming relatively cheaper.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 4-7
  
-Refer to Exhibit 4-7.How many unskilled workers are employed at the minimum wage?

Accepted Answer

A)  N2 
B)  N1 
C)  N3 
D)  N1 + N3 
A)  N2 
B)  N1 
C)  N3 
D)  N1 + N3

Question 7

Exhibit 4-2
  
-Exhibit 4-2 represents the orange juice market.The horizontal line represents a price ceiling imposed by the government.Which of the following is true?

Accepted Answer

A)  At equilibrium, the quantity demanded is 700 units. 
B)  At the price ceiling, there is a surplus of orange juice. 
C)  The quantity supplied at the price ceiling will equal the quantity sold. 
D)  The quantity demanded at the price ceiling will equal the quantity supplied. 
E)  The quantity demanded at the price ceiling will equal the quantity sold. 
A)  At equilibrium, the quantity demanded is 700 units. 
B)  At the price ceiling, there is a surplus of orange juice. 
C)  The quantity supplied at the price ceiling will equal the quantity sold. 
D)  The quantity demanded at the price ceiling will equal the quantity supplied. 
E)  The quantity demanded at the price ceiling will equal the quantity sold.

Question 8

One of the effects of a price floor (set above equilibrium price)is

Accepted Answer

A)  a surplus. 
B)  higher-quality goods are produced. 
C)  more satisfied customers. 
D)  all of the above 
E)  none of the above 
A)  a surplus. 
B)  higher-quality goods are produced. 
C)  more satisfied customers. 
D)  all of the above 
E)  none of the above

Question 9

Exhibit 4-1
  
-Refer to Exhibit 4-1.Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

Accepted Answer

A)  $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others. 
B)  they think it is only fair for sellers to receive higher prices. 
C)  they want to increase their chances of buying a good for which there is a shortage. 
D)  it is customary to pay more than the price ceiling. 
A)  $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others. 
B)  they think it is only fair for sellers to receive higher prices. 
C)  they want to increase their chances of buying a good for which there is a shortage. 
D)  it is customary to pay more than the price ceiling.

Question 10

Exhibit 4-7
  
-Refer to Exhibit 4-7.The number of unskilled workers who want to work at the minimum wage is

Accepted Answer

A)  N3. 
B)  N1. 
C)  N2. 
D)  N2 - N1. 
A)  N3. 
B)  N1. 
C)  N2. 
D)  N2 - N1.

Question 11

Exhibit 4-9
  
-Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $11. How many fewer units would be exchanged with the price ceiling than in a free market?

Accepted Answer

A)  50 
B)  30 
C)  40 
D)  70 
A)  50 
B)  30 
C)  40 
D)  70

Question 12

Exhibit 4-9
  
-Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. _________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.

Accepted Answer

A)  150; 220 
B)  150; 70 
C)  110; 180 
D)  150; 90 
A)  150; 220 
B)  150; 70 
C)  110; 180 
D)  150; 90

Question 13

Exhibit 4-5
  
-Refer to Exhibit 4-5.If a free market were allowed in the transplanted kidney market,then the equilibrium price would be P2.The number of kidneys transplanted would increase by _________ compared to the number transplanted at a price ceiling of P= $0.

Accepted Answer

A)  (Q3 - Q1) 
B)  (Q3 - Q2) 
C)  (Q2 - Q1) 
D)  Q2 
A)  (Q3 - Q1) 
B)  (Q3 - Q2) 
C)  (Q2 - Q1) 
D)  Q2

Question 14

A price floor is usually set _____________ the equilibrium price.

Accepted Answer

A)  above 
B)  at 
C)  below 
D)  at or below 
A)  above 
B)  at 
C)  below 
D)  at or below

Question 15

Situation 4-1
  
-Refer to Situation 4-1.An economist would predict that once price controls were abolished in the spring of 1974,

Accepted Answer

A)  the price of gasoline would decline sharply. 
B)  the surplus of gasoline would go away. 
C)  the shortage of gasoline would go away. 
D)  the demand for gasoline would decrease. 
E)  both c and d 
A)  the price of gasoline would decline sharply. 
B)  the surplus of gasoline would go away. 
C)  the shortage of gasoline would go away. 
D)  the demand for gasoline would decrease. 
E)  both c and d

Question 16

Exhibit 4-3
  
-Refer to Exhibit 4-3.If P1 is a price ceiling,the highest price for good Y,which is tied (a tie-in sale)to good X,is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P3 - P1. 
E)  P1 + P2. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P3 - P1. 
E)  P1 + P2.

Question 17

Exhibit 4-8
  
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What has happened to the consumers' surplus as a result of the imposition of the price floor?

Accepted Answer

A)  consumers' surplus has gone down by (area 2 + 4) 
B)  consumers' surplus has risen by (area 2 + 4) 
C)  consumers' surplus has gone down by (area 3 - area 5) 
D)  consumers' surplus has risen by (area 2 + 3) 
A)  consumers' surplus has gone down by (area 2 + 4) 
B)  consumers' surplus has risen by (area 2 + 4) 
C)  consumers' surplus has gone down by (area 3 - area 5) 
D)  consumers' surplus has risen by (area 2 + 3)

Question 18

Which of the following is false?

Accepted Answer

A)  In 1965 and 1969 the U.S. federal government imposed price ceilings on gasoline. 
B)  When the government imposed price ceilings on gasoline in the U.S., the result was a shortage of gasoline. 
C)  If a price ceiling is imposed (below the equilibrium price) in a given market, the result is a shortage in that market. 
D)  First-come-first-served is a commonly used rationing device. 
A)  In 1965 and 1969 the U.S. federal government imposed price ceilings on gasoline. 
B)  When the government imposed price ceilings on gasoline in the U.S., the result was a shortage of gasoline. 
C)  If a price ceiling is imposed (below the equilibrium price) in a given market, the result is a shortage in that market. 
D)  First-come-first-served is a commonly used rationing device.

Question 19

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

Accepted Answer

A) True 
 B)False

Question 20

The minimum wage is an example of a

Accepted Answer

A)  price door. 
B)  price wall. 
C)  price floor. 
D)  price ceiling. 
A)  price door. 
B)  price wall. 
C)  price floor. 
D)  price ceiling.

Exam 4: Prices: Free, Controlled, and Relative

Exhibit 4-5 -Refer to Exhibit 4-5.Suppose the government imposes a price ceiling at P = $0.The result will be a

Which of the following statements is true?

If the price of good X is $100 and the price of good Y is $40,it follows that the relative price of one unit of good Y is ___________ unit(s)of good X.

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound. If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _______________ and the relative price of butter has _______________.

It is possible for the absolute price of a good to rise at the same time that the good is becoming relatively cheaper.

Exhibit 4-7 -Refer to Exhibit 4-7.How many unskilled workers are employed at the minimum wage?

Exhibit 4-2 -Exhibit 4-2 represents the orange juice market.The horizontal line represents a price ceiling imposed by the government.Which of the following is true?

One of the effects of a price floor (set above equilibrium price)is

Exhibit 4-1 -Refer to Exhibit 4-1.Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

Exhibit 4-7 -Refer to Exhibit 4-7.The number of unskilled workers who want to work at the minimum wage is

Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $11. How many fewer units would be exchanged with the price ceiling than in a free market?

Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. _________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.

Exhibit 4-5 -Refer to Exhibit 4-5.If a free market were allowed in the transplanted kidney market,then the equilibrium price would be P2.The number of kidneys transplanted would increase by _________ compared to the number transplanted at a price ceiling of P= $0.

A price floor is usually set _____________ the equilibrium price.

Situation 4-1 -Refer to Situation 4-1.An economist would predict that once price controls were abolished in the spring of 1974,

Exhibit 4-3 -Refer to Exhibit 4-3.If P1 is a price ceiling,the highest price for good Y,which is tied (a tie-in sale)to good X,is

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What has happened to the consumers' surplus as a result of the imposition of the price floor?

Which of the following is false?

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

The minimum wage is an example of a

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound. If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _ and the relative price of butter has _.

Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. _ units would be exchanged in a free market,and ____ units would be exchanged with the price ceiling in effect.

Exhibit 4-5 -Refer to Exhibit 4-5.If a free market were allowed in the transplanted kidney market,then the equilibrium price would be P₂.The number of kidneys transplanted would increase by _________ compared to the number transplanted at a price ceiling of P= $0.

Exhibit 4-3 -Refer to Exhibit 4-3.If P₁ is a price ceiling,the highest price for good Y,which is tied (a tie-in sale)to good X,is

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What has happened to the consumers' surplus as a result of the imposition of the price floor?