Question 1

Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

Accepted Answer

A)  the schools must develop some type of non-price rationing device. 
B)  it follows that all classes will have a shortage of seats. 
C)  it follows that all classes will have a surplus of seats. 
D)  it follows that some classes will likely have a shortage of seats while other classes may have a surplus of seats. 
E)  a and d 
A)  the schools must develop some type of non-price rationing device. 
B)  it follows that all classes will have a shortage of seats. 
C)  it follows that all classes will have a surplus of seats. 
D)  it follows that some classes will likely have a shortage of seats while other classes may have a surplus of seats. 
E)  a and d E

Question 2

Residents of cities with a reputation for good weather,ceteris paribus,

Accepted Answer

A)  pay a higher price for housing because the demand for housing is higher. 
B)  pay a higher price for housing because the supply of housing is higher. 
C)  pay a higher price for housing because the supply and demand for housing is higher. 
D)  pay the same for housing as they would in cities with a reputation for bad weather. 
A)  pay a higher price for housing because the demand for housing is higher. 
B)  pay a higher price for housing because the supply of housing is higher. 
C)  pay a higher price for housing because the supply and demand for housing is higher. 
D)  pay the same for housing as they would in cities with a reputation for bad weather. A

Question 3

When the government _____________ mortgage lending standards,the indirect result is likely to be _____________ home prices.

Accepted Answer

A)  lowers; higher 
B)  increases; lower 
C)  lowers; lower 
D)  increases; higher 
E)  a and b 
A)  lowers; higher 
B)  increases; lower 
C)  lowers; lower 
D)  increases; higher 
E)  a and b E

Question 4

Suppose that a television studio has two shows,X and Z,and that tickets for viewing the taping of each show is free. The equilibrium price for a ticket to view the taping of show X is $25 and the equilibrium price for a ticket to view the taping of show B is -$20. It is likely that tickets to show ________ will need to be rationed on a first-come-first-served basis,while the producers of show ________ will have a much more difficult time filling the seats in the studio since the equilibrium price for tickets to that show is a __________ dollar amount.

Accepted Answer

A)  Z; X; positive 
B)  Z; X; negative 
C)  X; Z; positive 
D)  X; Z; negative 
A)  Z; X; positive 
B)  Z; X; negative 
C)  X; Z; positive 
D)  X; Z; negative

Question 5

The price of good X has a pattern such that P = $3 on Monday through Thursday of every week,and P = $2 on Fridays. If speculators begin participating in the market for good X,their actions will likely lead to a(n)______________ in the price of good X on Monday through Thursday and a(n)_______________ in the price of good X on Friday.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 6

If more people join carpools and travel to work together

Accepted Answer

A)  the demand curve for freeway space shifts leftward. 
B)  the supply curve for freeway space shifts rightward. 
C)  the supply curve for freeway space shifts leftward. 
D)  a and b 
E)  none of the above 
A)  the demand curve for freeway space shifts leftward. 
B)  the supply curve for freeway space shifts rightward. 
C)  the supply curve for freeway space shifts leftward. 
D)  a and b 
E)  none of the above

Question 7

People who buy houses in good-weather locations receive this benefit absolutely for free.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 5-6
  
-Refer to Exhibit 5-6.Under law 1 a renter has 30 days to vacate an apartment after being served with an eviction notice. Under law 2,the renter has 90 days to vacate after being served with an eviction notice. This graph shows that the supply of apartments is____________ under law 1 than under law 2,and thus apartment rent is _______________ under law 1 than under law 2.

Accepted Answer

A)  less; lower 
B)  less; higher 
C)  greater; lower 
D)  greater; higher 
A)  less; lower 
B)  less; higher 
C)  greater; lower 
D)  greater; higher

Question 9

If the purchase and sale of a currently illegal drug (for example,marijuana)were decriminalized,economists would expect

Accepted Answer

A)  an increase in demand and supply of this drug. 
B)  an increase in demand and a decrease in supply of this drug. 
C)  a decrease in demand and an increase in supply of this drug. 
D)  a decrease in demand and supply of this drug. 
A)  an increase in demand and supply of this drug. 
B)  an increase in demand and a decrease in supply of this drug. 
C)  a decrease in demand and an increase in supply of this drug. 
D)  a decrease in demand and supply of this drug.

Question 10

Exhibit 5-2
  
-Refer to Exhibit 5-2.If the tuition is set at $60 there will be

Accepted Answer

A)  a shortage at 10 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at both 10 a.m. and 8 a.m. because the price is half-way between their individual equilibria. 
D)  none of the above 
A)  a shortage at 10 
B)  a surplus at 10 a.m. and a shortage at 8 a.m. 
C)  equilibrium at both 10 a.m. and 8 a.m. because the price is half-way between their individual equilibria. 
D)  none of the above

Question 11

The demand for seats in 10 a.m.classes at the university is higher than the demand for seats in 8 a.m.classes.The supply of seats is fixed.If the university prices classes at the price required to achieve equilibrium at 10 a.m.,there will be

Accepted Answer

A)  a shortage at 8 
B)  a surplus at 8 a.m. 
C)  equilibrium at 8 a.m. 
D)  disequilibrium at 8 a.m., but we cannot determine which type. 
A)  a shortage at 8 
B)  a surplus at 8 a.m. 
C)  equilibrium at 8 a.m. 
D)  disequilibrium at 8 a.m., but we cannot determine which type.

Question 12

Exhibit 5-3
  
-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete. Suppose that NCAA rules limit the amount that the college can pay this athlete,such that their payment can not exceed the cost of attending the college (currently $8,000). The impact of this ruling would be a loss of income to the athlete of __________ and an equal gain in consumers' surplus to the college represented by ________________.

Accepted Answer

A)  $2,000; area 2 
B)  $8,000; area 3 
C)  $10,000; area 2 + 3 
D)  $2,000; area 1 + 2 
A)  $2,000; area 2 
B)  $8,000; area 3 
C)  $10,000; area 2 + 3 
D)  $2,000; area 1 + 2

Question 13

Exhibit 5-4
  
-If the government sets out to make home buying easier for more people by forcing lenders to accept ____________ down payments and ______________ interest rates,the result will likely be a(n)_______________ in housing prices.

Accepted Answer

A)  lower; lower; increase 
B)  higher; higher; increase 
C)  lower; higher; decrease 
D)  higher; lower; decrease 
A)  lower; lower; increase 
B)  higher; higher; increase 
C)  lower; higher; decrease 
D)  higher; lower; decrease

Question 14

If the supply of aisle seats and middle seats on an airplane is the same,but the demand for aisle seats is greater than the demand for middle seats,then the equilibrium price of aisle seats will be less than the equilibrium price of middle seats.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 5-2
  
-Refer to Exhibit 5-2.If the tuition is set at $40,there will need to be some kind of non-price rationing device used for

Accepted Answer

A)  8 a.m. classes. 
B)  10 a.m. classes. 
C)  a and b 
D)  none of the above 
A)  8 a.m. classes. 
B)  10 a.m. classes. 
C)  a and b 
D)  none of the above

Question 16

The space on the freeway is fixed at any instant of time.A supply curve that shows this is

Accepted Answer

A)  perfectly horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  perfectly vertical. 
A)  perfectly horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  perfectly vertical.

Question 17

Colleges and universities use such things as grade point averages and standardized test scores as

Accepted Answer

A)  a measure of consumer utility. 
B)  non-price rationing devices. 
C)  a means to shift the supply curve for a college education. 
D)  solely to frustrate prospective students. 
A)  a measure of consumer utility. 
B)  non-price rationing devices. 
C)  a means to shift the supply curve for a college education. 
D)  solely to frustrate prospective students.

Question 18

Explain in detail how the legalization of marijuana would be expected to impact the equilibrium price and quantity for marijuana.

Accepted Answer

Legalization of any currently illegal dr

Question 19

When the government enacts policies that lead to lower mortgage lending standards and lower interest rates,their actions can indirectly lead to higher home prices.

Accepted Answer

A) True 
 B)False

Question 20

If the price of a good ____________,the demand for its complements will __________.

Accepted Answer

A)  rises; fall 
B)  falls; rise 
C)  falls; fall 
D)  rises; rise 
E)  a and b 
A)  rises; fall 
B)  falls; rise 
C)  falls; fall 
D)  rises; rise 
E)  a and b

Exam 5: Supply, Demand, and Price: Applications

Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

Residents of cities with a reputation for good weather,ceteris paribus,

When the government _____________ mortgage lending standards,the indirect result is likely to be _____________ home prices.

If more people join carpools and travel to work together

People who buy houses in good-weather locations receive this benefit absolutely for free.

If the purchase and sale of a currently illegal drug (for example,marijuana)were decriminalized,economists would expect

Exhibit 5-2 -Refer to Exhibit 5-2.If the tuition is set at $60 there will be

The demand for seats in 10 a.m.classes at the university is higher than the demand for seats in 8 a.m.classes.The supply of seats is fixed.If the university prices classes at the price required to achieve equilibrium at 10 a.m.,there will be

Exhibit 5-4 -If the government sets out to make home buying easier for more people by forcing lenders to accept ____________ down payments and ______________ interest rates,the result will likely be a(n)_______________ in housing prices.

If the supply of aisle seats and middle seats on an airplane is the same,but the demand for aisle seats is greater than the demand for middle seats,then the equilibrium price of aisle seats will be less than the equilibrium price of middle seats.

Exhibit 5-2 -Refer to Exhibit 5-2.If the tuition is set at $40,there will need to be some kind of non-price rationing device used for

The space on the freeway is fixed at any instant of time.A supply curve that shows this is

Colleges and universities use such things as grade point averages and standardized test scores as

Explain in detail how the legalization of marijuana would be expected to impact the equilibrium price and quantity for marijuana.

When the government enacts policies that lead to lower mortgage lending standards and lower interest rates,their actions can indirectly lead to higher home prices.

If the price of a good ____________,the demand for its complements will __________.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

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

When the government _ mortgage lending standards,the indirect result is likely to be _ home prices.

Exhibit 5-4 -If the government sets out to make home buying easier for more people by forcing lenders to accept down payments and interest rates,the result will likely be a(n)_____ in housing prices.

If the price of a good __,the demand for its complements will .