Exam 4: Markets in Action

Over a ten year period, the monthly charge for cellular phone service decreased from $120 per month to $30 per month. At the same time, the number of subscribers increased from less than 10 million to more than 75 million. Which of the following provides the best explanation for these changes?

The minimum-wage law is a common example of a price ceiling.

A free rider is a person who:

A black market may arise when government imposes a price ceiling.

Each year around Valentine's Day, we would expect:

Which of the following would be an example of a public good?

Exhibit 4-4  Supply and demand curves for good X An increase in buyers' income, assuming good X is a normal good, combined with an increase in the wage rate paid to workers producing good X would be represented by which of the following changes in equilibrium shown in Graph C of Exhibit 4-4?

Assume that the production of a good imposes external costs upon third parties. If the price and quantity of this good is set by supply and demand the price will be too:

Exhibit 4-3  Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₂, Q₂ (E₂). Changes in market conditions result in a new equilibrium at P₂, Q₄ (E₄). This change is stated as a(n):

Which of the following is not a market failure?

Which of the following is the best example of a public good?

Exhibit 4-10  Supply and demand data for apricots In Exhibit 4-10, the equilibrium price is:

Price ceilings set below the equilibrium create:

Exhibit 4-9  Data on supply and demand In Exhibit 4-9 the equilibrium price and quantity in the market are:

Which of the following is not a common effect of imposing a rent control?

If the equilibrium price of good X is $5 and a price ceiling is imposed at $4, the result will be a(n):

A price floor (support price) set above equilibrium:

Which of the following would generate positive externalities?

Pete throws leftover bread onto his front lawn because he enjoys watching the pigeons feeding. His neighbor John is not happy about the pigeons, since they leave a mess on his property. This is an example of:

​ A price ceiling is a legally established minimum price a seller can be paid.