Question 1

Price serves as a

Accepted Answer

A)  rationing device. 
B)  transmitter of information. 
C)  means of determining who gets what of the available limited resources and goods. 
D)  a and b 
E)  all of the above 
A)  rationing device. 
B)  transmitter of information. 
C)  means of determining who gets what of the available limited resources and goods. 
D)  a and b 
E)  all of the above

Question 2

Exhibit 4-9
  
-Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. The number of units that would be exchanged in this market would be

Accepted Answer

A)  150, since that is the equilibrium quantity and the price ceiling is below the equilibrium price. 
B)  220, since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied). 
C)  90, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). 
D)  155, since that is the average of the quantity demanded and the quantity supplied at the price ceiling. 
A)  150, since that is the equilibrium quantity and the price ceiling is below the equilibrium price. 
B)  220, since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied). 
C)  90, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). 
D)  155, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question 3

If the minimum wage law sets a price floor that is below the equilibrium wage in the unskilled labor market,the minimum wage will create a shortage of unskilled labor.

Accepted Answer

A) True 
 B)False

Question 4

Situation 4-1
  
-Refer to Situation 4-1.Before the oil embargo,the price ceiling on gasoline had no noticeable effect on the market.What is the most likely explanation for this?

Accepted Answer

A)  The equilibrium price of gasoline was close to the ceiling price and probably below it. 
B)  The demand curve for gasoline in the 1970s was quite different from today's. 
C)  The supply curve for gasoline in the 1970s was quite different from today's. 
D)  The effects of price ceilings are dependent upon the benevolence of the government imposing them. 
A)  The equilibrium price of gasoline was close to the ceiling price and probably below it. 
B)  The demand curve for gasoline in the 1970s was quite different from today's. 
C)  The supply curve for gasoline in the 1970s was quite different from today's. 
D)  The effects of price ceilings are dependent upon the benevolence of the government imposing them.

Question 5

A price ceiling is usually set _____________ the equilibrium price.

Accepted Answer

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

Question 6

A tax placed on a good can make that good relatively more expensive and its substitutes relatively less expensive.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 4-6
  
-Refer to Exhibit 4-6.Suppose the minimum wage is set at $5.The result will be

Accepted Answer

A)  unemployment. 
B)  a shortage of unskilled labor. 
C)  no effect on the unskilled labor market. 
D)  a prolonged surplus of unskilled labor. 
E)  none of the above 
A)  unemployment. 
B)  a shortage of unskilled labor. 
C)  no effect on the unskilled labor market. 
D)  a prolonged surplus of unskilled labor. 
E)  none of the above

Question 8

If the price of good X is $50 and the price of good Y is $25,it follows that the relative price of one unit of good X is _____________ unit(s)of good Y.

Accepted Answer

A)  1.00 
B)  2.00 
C)  0.75 
D)  1.33 
E)  0.50 
A)  1.00 
B)  2.00 
C)  0.75 
D)  1.33 
E)  0.50

Question 9

At the minimum wage (set above the equilibrium wage),

Accepted Answer

A)  all individuals who end up working are paid less than if they were paid the equilibrium wage. 
B)  none of the workers will lose there jobs or find themselves working fewer hours. 
C)  none of the individuals who end up working are paid more than if they were paid the equilibrium wage. 
D)  there will be fewer people working (or fewer labor hours demanded) than at the equilibrium wage. 
E)  none of the above 
A)  all individuals who end up working are paid less than if they were paid the equilibrium wage. 
B)  none of the workers will lose there jobs or find themselves working fewer hours. 
C)  none of the individuals who end up working are paid more than if they were paid the equilibrium wage. 
D)  there will be fewer people working (or fewer labor hours demanded) than at the equilibrium wage. 
E)  none of the above

Question 10

Price ceilings sometimes result in some buyers and sellers purchasing the good under the table at prohibited prices.

Accepted Answer

A) True 
 B)False

Question 11

A shortage of kidneys (for transplants)results from

Accepted Answer

A)  the legal price being set below equilibrium. 
B)  the legal price being set above equilibrium. 
C)  a price floor being set in the kidney market at P = $0, assuming the equilibrium price is greater than $0. 
D)  a price ceiling being set in the kidney market at P = $0, assuming the equilibrium price is greater than $0. 
E)  a and d 
A)  the legal price being set below equilibrium. 
B)  the legal price being set above equilibrium. 
C)  a price floor being set in the kidney market at P = $0, assuming the equilibrium price is greater than $0. 
D)  a price ceiling being set in the kidney market at P = $0, assuming the equilibrium price is greater than $0. 
E)  a and d

Question 12

If the minimum wage is set above the equilibrium wage,then

Accepted Answer

A)  more people will work than at the equilibrium wage. 
B)  the same number of people will work as at the equilibrium wage. 
C)  fewer people will want to work than at the equilibrium wage. 
D)  there will be fewer labor hours purchased by employers than at the equilibrium wage. 
E)  none of the above 
A)  more people will work than at the equilibrium wage. 
B)  the same number of people will work as at the equilibrium wage. 
C)  fewer people will want to work than at the equilibrium wage. 
D)  there will be fewer labor hours purchased by employers than at the equilibrium wage. 
E)  none of the above

Question 13

Situation 4-1
  
-Refer to Situation 4-1.An economist would predict that the oil embargo imposed in 1974 would result in a

Accepted Answer

A)  leftward shift in the supply (curve) of gasoline. 
B)  rightward shift in the supply (curve) of gasoline. 
C)  leftward shift in the demand (curve) for gasoline. 
D)  rightward shift in the demand (curve) for gasoline. 
E)  both a and d 
A)  leftward shift in the supply (curve) of gasoline. 
B)  rightward shift in the supply (curve) of gasoline. 
C)  leftward shift in the demand (curve) for gasoline. 
D)  rightward shift in the demand (curve) for gasoline. 
E)  both a and d

Question 14

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

Accepted Answer

A)  minimum wage will create a surplus of unskilled labor. 
B)  minimum wage will create a shortage of unskilled labor. 
C)  minimum wage will not impact the unskilled labor market. 
D)  unskilled labor market will change, but we cannot be certain how. 
A)  minimum wage will create a surplus of unskilled labor. 
B)  minimum wage will create a shortage of unskilled labor. 
C)  minimum wage will not impact the unskilled labor market. 
D)  unskilled labor market will change, but we cannot be certain how.

Question 15

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 16

When the price of a good rises,the price is transmitting information indicating that the good is relatively

Accepted Answer

A)  scarcer. 
B)  less scarce. 
C)  more plentiful in supply. 
D)  b and c 
A)  scarcer. 
B)  less scarce. 
C)  more plentiful in supply. 
D)  b and c

Question 17

The need for a rationing device results from scarcity.

Accepted Answer

A) True 
 B)False

Question 18

Suppose you live in New York City and the government has imposed price ceilings on apartment rental rates.You want to rent an apartment from Smith,who says that unless you buy the furniture in the apartment for $4,000,he cannot rent the apartment to you.The condition of buying the furniture could be considered

Accepted Answer

A)  a price ceiling. 
B)  a price floor. 
C)  a tie-in sale. 
D)  to be something no renter would agree to. 
E)  c and d 
A)  a price ceiling. 
B)  a price floor. 
C)  a tie-in sale. 
D)  to be something no renter would agree to. 
E)  c and d

Question 19

There are two goods in the economy,apples and bread.The relative price of apples has increased.This could be due to

Accepted Answer

A)  an increase in the absolute price of apples, ceteris paribus. 
B)  a decrease in the absolute price of bread, ceteris paribus. 
C)  a decrease in the absolute price of apples, ceteris paribus. 
D)  an increase in the absolute price of bread, ceteris paribus. 
E)  a and b 
A)  an increase in the absolute price of apples, ceteris paribus. 
B)  a decrease in the absolute price of bread, ceteris paribus. 
C)  a decrease in the absolute price of apples, ceteris paribus. 
D)  an increase in the absolute price of bread, ceteris paribus. 
E)  a and b

Question 20

Exhibit 4-3
  
-Refer to Exhibit 4-3.If price P3 is a price ceiling,then

Accepted Answer

A)  the price ceiling does not have an effect on the market for good X. 
B)  the price at which exchange takes place is P3. 
C)  the price at which exchange takes place is P2. 
D)  there is a shortage in the market for good X. 
E)  both a and c 
A)  the price ceiling does not have an effect on the market for good X. 
B)  the price at which exchange takes place is P3. 
C)  the price at which exchange takes place is P2. 
D)  there is a shortage in the market for good X. 
E)  both a and c

Exam 4: Prices: Free, Controlled, and Relative

Price serves as a

Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. The number of units that would be exchanged in this market would be

If the minimum wage law sets a price floor that is below the equilibrium wage in the unskilled labor market,the minimum wage will create a shortage of unskilled labor.

Situation 4-1 -Refer to Situation 4-1.Before the oil embargo,the price ceiling on gasoline had no noticeable effect on the market.What is the most likely explanation for this?

A price ceiling is usually set _____________ the equilibrium price.

A tax placed on a good can make that good relatively more expensive and its substitutes relatively less expensive.

Exhibit 4-6 -Refer to Exhibit 4-6.Suppose the minimum wage is set at $5.The result will be

If the price of good X is $50 and the price of good Y is $25,it follows that the relative price of one unit of good X is _____________ unit(s)of good Y.

At the minimum wage (set above the equilibrium wage),

Price ceilings sometimes result in some buyers and sellers purchasing the good under the table at prohibited prices.

A shortage of kidneys (for transplants)results from

If the minimum wage is set above the equilibrium wage,then

Situation 4-1 -Refer to Situation 4-1.An economist would predict that the oil embargo imposed in 1974 would result in a

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

When the price of a good rises,the price is transmitting information indicating that the good is relatively

The need for a rationing device results from scarcity.

There are two goods in the economy,apples and bread.The relative price of apples has increased.This could be due to

Exhibit 4-3 -Refer to Exhibit 4-3.If price P3 is a price ceiling,then

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

Exhibit 4-3 -Refer to Exhibit 4-3.If price P₃ is a price ceiling,then