Question 1

Exhibit 4-4
  
-Refer to Exhibit 4-4. Which of the following statements is false?

Accepted Answer

A) Graph (1): A price ceiling set at P2 would not have an impact on the market. 
B) Graph (2): As supply increases, equilibrium price remains constant. 
C) Graph (3): As demand increases, equilibrium quantity remains constant. 
D) Graph (4): As supply increases, equilibrium quantity increases. 
A) Graph (1): A price ceiling set at P2 would not have an impact on the market. 
B) Graph (2): As supply increases, equilibrium price remains constant. 
C) Graph (3): As demand increases, equilibrium quantity remains constant. 
D) Graph (4): As supply increases, equilibrium quantity increases.

Question 2

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 3

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

Accepted Answer

A) At the price ceiling the surplus equals 400 units. 
B) At the price ceiling the shortage equals 400 units. 
C) At the price ceiling the surplus equals 300 units. 
D) At the price ceiling the shortage equals 200 units. 
E) none of the above 
A) At the price ceiling the surplus equals 400 units. 
B) At the price ceiling the shortage equals 400 units. 
C) At the price ceiling the surplus equals 300 units. 
D) At the price ceiling the shortage equals 200 units. 
E) none of the above

Question 4

Exhibit 4-3
  
-Refer to Exhibit 4-3. If price P2 is a price ceiling, then

Accepted Answer

A) there is a shortage in the market for good X. 
B) the highest price that can legally be charged in this market is P3. 
C) the price at which exchange legally takes place in the market for good X is P2. 
D) the quantity exchanged is less than the quantity demanded. 
E) all of the above 
A) there is a shortage in the market for good X. 
B) the highest price that can legally be charged in this market is P3. 
C) the price at which exchange legally takes place in the market for good X is P2. 
D) the quantity exchanged is less than the quantity demanded. 
E) all of the above

Question 5

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market. Give a hypothetical numerical example to help support your answer.

Accepted Answer

In order for a price ceiling to have an

Question 6

Exhibit 4-10
​
​
   Unskilled Labor Market
​
​
-Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. The minimum wage will result in a ___________ of ________ thousand unskilled workers.

Accepted Answer

A) shortage; 2 
B) shortage; 3 
C) surplus; 2 
D) surplus; 3 
A) shortage; 2 
B) shortage; 3 
C) surplus; 2 
D) surplus; 3

Question 7

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 8

A shortage of unskilled labor will occur if the minimum wage is set below the equilibrium wage in the unskilled labor market.

Accepted Answer

A) True 
 B)False

Question 9

If the price of good X is $30 and the price of good Y is $5, it follows that the relative price of one unit of good X is approximately_____________ unit(s) of good Y.

Accepted Answer

A) 6.00 
B) 2.00 
C) 0.75 
D) 0.25 
E) 0.50 
A) 6.00 
B) 2.00 
C) 0.75 
D) 0.25 
E) 0.50

Question 10

Which of the following statements is true?

Accepted Answer

A) Price ceilings set below the equilibrium price cause shortages. 
B) Surpluses result when a price floor is set above the equilibrium price. 
C) Price ceililngs set above the equilibrium price cause surpluses. 
D) Price ceilings are set by the market and price floors are set by the government. 
E) ​a and b 
A) Price ceilings set below the equilibrium price cause shortages. 
B) Surpluses result when a price floor is set above the equilibrium price. 
C) Price ceililngs set above the equilibrium price cause surpluses. 
D) Price ceilings are set by the market and price floors are set by the government. 
E) ​a and b

Question 11

A price ceiling set below the equilibrium price will

Accepted Answer

A) clear the market for the good. 
B) result in a shortage of the good. 
C) result in a surplus of the good. 
D) induce new firms to enter the industry. 
A) clear the market for the good. 
B) result in a shortage of the good. 
C) result in a surplus of the good. 
D) induce new firms to enter the industry.

Question 12

​
Exhibit 4-11
​
  
-Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. How many fewer units would be bought and sold at the price floor compared to the number of units that would be bought and sold in a free market?

Accepted Answer

A) 20 
B) 30 
C) 40 
D) 60 
E) 80 
A) 20 
B) 30 
C) 40 
D) 60 
E) 80

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

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

Question 16

If the minimum wage law sets a wage floor below 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 17

Which of the following statement is false based on information presented in the textbook?

Accepted Answer

A) There is evidence of a shortage in the market for kidneys (for transplants). 
B) The waiting list for transplanted kidneys is used as a non-price rationing device. 
C) There is a price ceiling in the market for transplanted kidneys at a price of $0. 
D) In the market for transplanted kidneys the legal price is the same as the equilibrium price. 
E) ​It is currently unlawful to buy or sell kidneys at any positive price. 
A) There is evidence of a shortage in the market for kidneys (for transplants). 
B) The waiting list for transplanted kidneys is used as a non-price rationing device. 
C) There is a price ceiling in the market for transplanted kidneys at a price of $0. 
D) In the market for transplanted kidneys the legal price is the same as the equilibrium price. 
E) ​It is currently unlawful to buy or sell kidneys at any positive price.

Question 18

​
Exhibit 4-11
​
  
-Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The result of the price ceiling would be a ____________ of ______ units of good ABC.

Accepted Answer

A) shortage; 20 
B) surplus; 20 
C) shortage; 60 
D) surplus; 60 
A) shortage; 20 
B) surplus; 20 
C) shortage; 60 
D) surplus; 60

Question 19

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 20

The minimum wage is a good example of a price floor.

Accepted Answer

A) True 
 B)False

Exam 4: Prices Free Controlled and Relative

Exhibit 4-4 -Refer to Exhibit 4-4. Which of the following statements is false?

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.

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

Exhibit 4-3 -Refer to Exhibit 4-3. If price P2 is a price ceiling, then

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market. Give a hypothetical numerical example to help support your answer.

Exhibit 4-10 ​ ​ Unskilled Labor Market ​ ​ -Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. The minimum wage will result in a ___________ of ________ thousand unskilled workers.

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

A shortage of unskilled labor will occur if the minimum wage is set below the equilibrium wage in the unskilled labor market.

If the price of good X is $30 and the price of good Y is $5, it follows that the relative price of one unit of good X is approximately_____________ unit(s) of good Y.

Which of the following statements is true?

A price ceiling set below the equilibrium price will

​ Exhibit 4-11 ​ -Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. How many fewer units would be bought and sold at the price floor compared to the number of units that would be bought and sold in a free market?

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

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

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

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

Which of the following statement is false based on information presented in the textbook?

​ Exhibit 4-11 ​ -Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The result of the price ceiling would be a ____________ of ______ units of good ABC.

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.

The minimum wage is a good example of a price floor.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II 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

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice 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

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 4-3 -Refer to Exhibit 4-3. If price P₂ is a price ceiling, then

Exhibit 4-10 Unskilled Labor Market -Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. The minimum wage will result in a ___ of thousand unskilled workers.

Exhibit 4-11 -Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. How many fewer units would be bought and sold at the price floor compared to the number of units that would be bought and sold in a free market?

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

Exhibit 4-11 -Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The result of the price ceiling would be a ______ of units of good ABC.

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.