Question 1

Setting a price support in the market for sugar beets above equilibrium price ________ the quantity produced and ________ the quantity bought by consumers.

Accepted Answer

A)  decreases; decreases 
B)  increases; decreases 
C)  decreases; increases 
D)  increases; increases 
E)  does not change; increases 
A)  decreases; decreases 
B)  increases; decreases 
C)  decreases; increases 
D)  increases; increases 
E)  does not change; increases

Question 2

The opportunity cost of an apartment in a rent controlled market is equal to

Accepted Answer

A)  the rent charged for the apartment. 
B)  the opportunity cost of searching for the apartment. 
C)  the rent charged for the apartment plus the opportunity cost of searching for the apartment. 
D)  nothing because of the surplus of apartments when there are rent controls. 
E)  the rent charged for the apartment minus the opportunity cost of searching for the apartment. 
A)  the rent charged for the apartment. 
B)  the opportunity cost of searching for the apartment. 
C)  the rent charged for the apartment plus the opportunity cost of searching for the apartment. 
D)  nothing because of the surplus of apartments when there are rent controls. 
E)  the rent charged for the apartment minus the opportunity cost of searching for the apartment.

Question 3

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $5 per ton,

Accepted Answer

A)  a deadweight loss is created. 
B)  the market becomes more efficient. 
C)  consumer surplus increases. 
D)  producers' economic profits increase. 
E)  None of the above answers is correct. 
A)  a deadweight loss is created. 
B)  the market becomes more efficient. 
C)  consumer surplus increases. 
D)  producers' economic profits increase. 
E)  None of the above answers is correct.

Question 4

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton.
-The figure above shows that to make the price support work,the government buys ________ million tons of sugar beets.

Accepted Answer

A)  10 
B)  20 
C)  30 
D)  5 
E)  15 
A)  10 
B)  20 
C)  30 
D)  5 
E)  15

Question 5

-The above figure shows the market for finish carpenters in Bozeman.There is a minimum wage set at $18.Compared to the initial equilibrium without the minimum wage,once the minimum wage is in place,and after taking account of job search,the total workers' surplus ________ and the total firms' surplus ________.

Accepted Answer

A)  decreases; increases 
B)  increases; increases 
C)  increases; decreases 
D)  does not change; increases 
E)  decreases; decreases 
A)  decreases; increases 
B)  increases; increases 
C)  increases; decreases 
D)  does not change; increases 
E)  decreases; decreases

Question 6

When a price ceiling is set below the equilibrium price,the quantity supplied ________ the quantity demanded and ________ exists.

Accepted Answer

A)  is less than; a surplus 
B)  is less than; a shortage 
C)  is greater than; a surplus 
D)  is greater than; a shortage 
E)  equals; an equilibrium 
A)  is less than; a surplus 
B)  is less than; a shortage 
C)  is greater than; a surplus 
D)  is greater than; a shortage 
E)  equals; an equilibrium

Question 7

-The graph shows the labor market for apple pickers in Ohio.If the government sets a minimum wage of $5 an hour,________ apple pickers are unemployed.

Accepted Answer

A)  6,000 
B)  8,000 
C)  10,000 
D)  14,000 
E)  more than 14,000 
A)  6,000 
B)  8,000 
C)  10,000 
D)  14,000 
E)  more than 14,000

Question 8

A housing shortage results when

Accepted Answer

A)  a tax is imposed on housing. 
B)  a rent ceiling below the equilibrium rent is imposed. 
C)  a rent ceiling above the equilibrium rent is imposed. 
D)  rents rise. 
E)  a rent floor below the equilibrium rent is imposed. 
A)  a tax is imposed on housing. 
B)  a rent ceiling below the equilibrium rent is imposed. 
C)  a rent ceiling above the equilibrium rent is imposed. 
D)  rents rise. 
E)  a rent floor below the equilibrium rent is imposed.

Question 9

When a price support is set below the equilibrium price,producers ________ the quantity supplied,and consumers ________ the quantity demanded.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  do not change; do not change 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  do not change; do not change

Question 10

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.When the price ceiling is in place and taking account of the resources lost in search,consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed.

Accepted Answer

A)  decreases; increases 
B)  decreases; decreases 
C)  increases; increases 
D)  increases; decreases 
E)  does not change; increases 
A)  decreases; increases 
B)  decreases; decreases 
C)  increases; increases 
D)  increases; decreases 
E)  does not change; increases

Question 11

-In the figure above,with the rent ceiling the quantity of housing supplied is ________ units,the quantity demanded is ________ units,and the quantity rented is ________ units.

Accepted Answer

A)  3,000; 6,000; 3,000 
B)  3,000; 6,000; 6,000 
C)  3,000; 6,000; 4,000 
D)  3,000; 3,000; 3,000 
E)  4,000; 4,000; 4,000 
A)  3,000; 6,000; 3,000 
B)  3,000; 6,000; 6,000 
C)  3,000; 6,000; 4,000 
D)  3,000; 3,000; 3,000 
E)  4,000; 4,000; 4,000

Question 12

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

Accepted Answer

A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
E)  unit elastic; unit elastic 
A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
E)  unit elastic; unit elastic

Question 13

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per slice } \
\text { of pizza) }
\end{array} & \begin{array} { c } 
\text { Quantity supplied }\
\text { (slices of pizza } \
\text { per week) }
\end{array} & \begin{array} { c } 
\text {  Quantity demanded } \
\text { (slices of pizza } \
\text { per week) }
\end{array} \
\hline 1 & 10 & 50 \
2 & 20 & 40 \
3 & 30 & 30 \
4 & 40 & 20 \
5 & 50 & 10
\end{array}$$
-The demand and supply schedules for pizza are in the table above.If the government sets a maximum legal price of $2 per slice of pizza,then

Accepted Answer

A)  there is a shortage of 20 slices of pizza. 
B)  this maximum price is an example of a price floor. 
C)  this maximum price is an example of a price ceiling. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A)  there is a shortage of 20 slices of pizza. 
B)  this maximum price is an example of a price floor. 
C)  this maximum price is an example of a price ceiling. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 14

When a rent ceiling law is passed in a city,which of the following occurs?

Accepted Answer

A)  The total price of renting an apartment decreases to all renters. 
B)  The quantity of apartments supplied does not change. 
C)  Some landlords and renters use methods such as "key money" to get around the rent ceiling law. 
D)  Renters have no trouble finding a nice, reasonably priced apartment to rent. 
E)  Generally the number of renters in the city increases because people move to the city to take advantage of the low-rent apartments. 
A)  The total price of renting an apartment decreases to all renters. 
B)  The quantity of apartments supplied does not change. 
C)  Some landlords and renters use methods such as "key money" to get around the rent ceiling law. 
D)  Renters have no trouble finding a nice, reasonably priced apartment to rent. 
E)  Generally the number of renters in the city increases because people move to the city to take advantage of the low-rent apartments.

Question 15

Which of the following is true?
i.A price ceiling set above the equilibrium price has no effects.
ii.A price ceiling set below the equilibrium price creates a surplus.
iii.A price floor set above the equilibrium price has no effects.

Accepted Answer

A)  only i 
B)  only ii 
C)  only iii 
D)  i and ii 
E)  ii and iii 
A)  only i 
B)  only ii 
C)  only iii 
D)  i and ii 
E)  ii and iii

Question 16

If the government imposes an effective ________,output decreases and ________ increases.

Accepted Answer

A)  price support; consumer surplus 
B)  price floor; consumer surplus 
C)  price support; total revenue 
D)  price floor; marginal benefit to consumers 
E)  price ceiling; efficiency 
A)  price support; consumer surplus 
B)  price floor; consumer surplus 
C)  price support; total revenue 
D)  price floor; marginal benefit to consumers 
E)  price ceiling; efficiency

Question 17

-The above figure shows a labor market with a minimum wage of $8 an hour.The deadweight loss equals the

Accepted Answer

A)  area abc. 
B)  distance ab. 
C)  distance ad. 
D)  area bad. 
E)  area acd. 
A)  area abc. 
B)  distance ab. 
C)  distance ad. 
D)  area bad. 
E)  area acd.

Question 18

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Wage rate } \
\text { (dollars per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Quantity supplied } \
\text { (workers) }
\end{array} \
\hline 12 & 400 & 1000 \
11 & 600 & 900 \
10 & 800 & 800 \
9 & 1000 & 700 \
8 & 1200 & 500
\end{array}$$
-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

Accepted Answer

A)  a surplus of 300 workers occurs. 
B)  there is no shortage or surplus of workers. 
C)  900 workers are employed. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  a surplus of 300 workers occurs. 
B)  there is no shortage or surplus of workers. 
C)  900 workers are employed. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 19

When a minimum wage is ________,the firms' surplus and workers' surplus shrink,a deadweight loss ________,and resources are lost in job search.

Accepted Answer

A)  inefficient; arises 
B)  inefficient; disappears 
C)  efficient; arises 
D)  efficient; disappears 
E)  nonexistent; arises 
A)  inefficient; arises 
B)  inefficient; disappears 
C)  efficient; arises 
D)  efficient; disappears 
E)  nonexistent; arises

Question 20

Both price supports and a price floor can

Accepted Answer

A)  create a deadweight loss. 
B)  decrease output below the equilibrium quantity. 
C)  decrease the price below the equilibrium price. 
D)  increase consumer surplus. 
E)  have no effect on producer surplus. 
A)  create a deadweight loss. 
B)  decrease output below the equilibrium quantity. 
C)  decrease the price below the equilibrium price. 
D)  increase consumer surplus. 
E)  have no effect on producer surplus.

Setting a price support in the market for sugar beets above equilibrium price the quantity produced and the quantity bought by consumers.

The opportunity cost of an apartment in a rent controlled market is equal to

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $5 per ton,

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that to make the price support work,the government buys ________ million tons of sugar beets.

-The above figure shows the market for finish carpenters in Bozeman.There is a minimum wage set at $18.Compared to the initial equilibrium without the minimum wage,once the minimum wage is in place,and after taking account of job search,the total workers' surplus and the total firms' surplus .

When a price ceiling is set below the equilibrium price,the quantity supplied the quantity demanded and exists.

-The graph shows the labor market for apple pickers in Ohio.If the government sets a minimum wage of $5 an hour,________ apple pickers are unemployed.

A housing shortage results when

When a price support is set below the equilibrium price,producers the quantity supplied,and consumers the quantity demanded.

-In the figure above,with the rent ceiling the quantity of housing supplied is units,the quantity demanded is units,and the quantity rented is units.

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

When a rent ceiling law is passed in a city,which of the following occurs?

Which of the following is true? i.A price ceiling set above the equilibrium price has no effects. ii.A price ceiling set below the equilibrium price creates a surplus. iii.A price floor set above the equilibrium price has no effects.

If the government imposes an effective ,output decreases and increases.

-The above figure shows a labor market with a minimum wage of $8 an hour.The deadweight loss equals the

Wage rate (dollars per hour) Quantity demanded (workers) Quantity supplied (workers) 12 400 1000 11 600 900 10 800 800 9 1000 700 8 1200 500 -The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

When a minimum wage is ,the firms' surplus and workers' surplus shrink,a deadweight loss ,and resources are lost in job search.

Both price supports and a price floor can

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 7: Government Actions in Markets

Setting a price support in the market for sugar beets above equilibrium price ________ the quantity produced and ________ the quantity bought by consumers.

The opportunity cost of an apartment in a rent controlled market is equal to

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $5 per ton,

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that to make the price support work,the government buys ________ million tons of sugar beets.

When a price ceiling is set below the equilibrium price,the quantity supplied ________ the quantity demanded and ________ exists.

-The graph shows the labor market for apple pickers in Ohio.If the government sets a minimum wage of $5 an hour,________ apple pickers are unemployed.

A housing shortage results when

When a price support is set below the equilibrium price,producers ________ the quantity supplied,and consumers ________ the quantity demanded.

-In the figure above,with the rent ceiling the quantity of housing supplied is ________ units,the quantity demanded is ________ units,and the quantity rented is ________ units.

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

When a rent ceiling law is passed in a city,which of the following occurs?

Which of the following is true? i.A price ceiling set above the equilibrium price has no effects. ii.A price ceiling set below the equilibrium price creates a surplus. iii.A price floor set above the equilibrium price has no effects.

If the government imposes an effective ________,output decreases and ________ increases.

-The above figure shows a labor market with a minimum wage of $8 an hour.The deadweight loss equals the

Wage rate (dollars per hour) Quantity demanded (workers) Quantity supplied (workers) 12 400 1000 11 600 900 10 800 800 9 1000 700 8 1200 500 -The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

When a minimum wage is ________,the firms' surplus and workers' surplus shrink,a deadweight loss ________,and resources are lost in job search.

Both price supports and a price floor can

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Setting a price support in the market for sugar beets above equilibrium price the quantity produced and the quantity bought by consumers.

When a price ceiling is set below the equilibrium price,the quantity supplied the quantity demanded and exists.

When a price support is set below the equilibrium price,producers the quantity supplied,and consumers the quantity demanded.

-In the figure above,with the rent ceiling the quantity of housing supplied is units,the quantity demanded is units,and the quantity rented is units.

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

If the government imposes an effective ,output decreases and increases.

When a minimum wage is ,the firms' surplus and workers' surplus shrink,a deadweight loss ,and resources are lost in job search.