Question 1

A minimum wage

Accepted Answer

A)  increases all workers' surplus because the wage rate increases. 
B)  increases consumer surplus because the price of the good decreases. 
C)  decreases the firms' surplus because fewer workers are hired at the higher wage. 
D)  increases the firms' surplus and the workers' surplus because it increases the efficiency of the labor market. 
E)  None of the above answers is correct. 
A)  increases all workers' surplus because the wage rate increases. 
B)  increases consumer surplus because the price of the good decreases. 
C)  decreases the firms' surplus because fewer workers are hired at the higher wage. 
D)  increases the firms' surplus and the workers' surplus because it increases the efficiency of the labor market. 
E)  None of the above answers is correct.

Question 2

Is the minimum wage fair?

Accepted Answer

A)  Yes, because all workers benefit because they are paid more. 
B)  No, because it enhances the prospects of voluntary exchange. 
C)  No, because workers who lose their jobs are made worse off. 
D)  Yes, because firms must pay a wage closer to a living wage. 
E)  Yes, because workers need the extra income. 
A)  Yes, because all workers benefit because they are paid more. 
B)  No, because it enhances the prospects of voluntary exchange. 
C)  No, because workers who lose their jobs are made worse off. 
D)  Yes, because firms must pay a wage closer to a living wage. 
E)  Yes, because workers need the extra income.

Question 3

Suppose the equilibrium rent in Denver is $1,050.A rent ceiling of $755 per month leads to

Accepted Answer

A)  a surplus of apartments in Denver. 
B)  a shortage of apartments in Denver. 
C)  no change in the Denver apartment market. 
D)  fair prices in the Denver market. 
E)  compared to the situation at the equilibrium rent, a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied. 
A)  a surplus of apartments in Denver. 
B)  a shortage of apartments in Denver. 
C)  no change in the Denver apartment market. 
D)  fair prices in the Denver market. 
E)  compared to the situation at the equilibrium rent, a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied.

Question 4

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.

Accepted Answer

A)  $800 
B)  $900 
C)  $1,800 
D)  $400 
E)  $200 
A)  $800 
B)  $900 
C)  $1,800 
D)  $400 
E)  $200

Question 5

-The above figure shows a labor market with minimum wage equal to $16.In this figure,what area equals the deadweight loss?

Accepted Answer

A)  area A 
B)  area B 
C)  area C 
D)  area D 
E)  area E 
A)  area A 
B)  area B 
C)  area C 
D)  area D 
E)  area E

Question 6

Who gains from a price support? Who loses? Explain how the size of the gain compares to the size of the loss.

Accepted Answer

Producers gain from a price support beca

Question 7

An illegal market in which the price exceeds a legally imposed price ceiling is called a

Accepted Answer

A)  shortage market. 
B)  surplus market. 
C)  black market. 
D)  fair market. 
E)  subsidized market. 
A)  shortage market. 
B)  surplus market. 
C)  black market. 
D)  fair market. 
E)  subsidized market.

Question 8

-In the figure above,if the minimum wage is $8 per hour,then

Accepted Answer

A)  resources used in job-search activity increase compared to the situation before the minimum wage. 
B)  it is legal to hire workers for a wage below the minimum wage because otherwise unemployment would result. 
C)  the deadweight loss is minimized. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  resources used in job-search activity increase compared to the situation before the minimum wage. 
B)  it is legal to hire workers for a wage below the minimum wage because otherwise unemployment would result. 
C)  the deadweight loss is minimized. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 9

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton.
-In the figure above,the quantity of sugar beets produced is ________ million tons per year,and the quantity bought by consumers is ________ million tons per year.

Accepted Answer

A)  30; 20 
B)  20; 30 
C)  25; 20 
D)  20; 25 
E)  25; 25 
A)  30; 20 
B)  20; 30 
C)  25; 20 
D)  20; 25 
E)  25; 25

Question 10

We know that the minimum wage causes unemployment.So,why does the government impose one?

Accepted Answer

The main reason for the minimum wage is

Question 11

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Accepted Answer

A)  area A 
B)  area B 
C)  area C 
D)  area D 
E)  area E 
A)  area A 
B)  area B 
C)  area C 
D)  area D 
E)  area E

Question 12

Which of the following is true?
i.A price ceiling set below the equilibrium price decreases search activity.
ii.A minimum wage is an example of a price ceiling.
iii.A price support decreases the quantity consumed.

Accepted Answer

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

Question 13

In the 1980s,one of the most common sights in the socialist countries,such as the former Soviet Union and North Korea,were long lines for bread,sugar,and other necessities.These countries had price ceilings on these necessities.Some of the socialist nations,such as the former Soviet Union,have moved to a market economy by lifting the price ceilings,while others,such as North Korea,have retained their price ceilings.What prediction do you make about the presence (or absence)of long lines today in the former Soviet Union and North Korea? Explain your answer.

Accepted Answer

The long lines have disappeared in the f

Question 14

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Accepted Answer

A minimum wage set above the equilibrium

Question 15

In a housing market with a rent ceiling set below the equilibrium rent,as time passes the supply of apartments

Accepted Answer

A)  decreases. 
B)  increases. 
C)  does not change. 
D)  becomes fixed by the government. 
E)  increases while the demand for apartments decreases. 
A)  decreases. 
B)  increases. 
C)  does not change. 
D)  becomes fixed by the government. 
E)  increases while the demand for apartments decreases.

Question 16

-The figure above illustrates the bagel market.Which of the following statements is correct?

Accepted Answer

A)  With a price ceiling of $1.00 per bagel, the price of a bagel is $1. 
B)  With a price ceiling of $3.00 per bagel, the price of a bagel is $2. 
C)  With no government intervention, the equilibrium price of a bagel is $2. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  With a price ceiling of $1.00 per bagel, the price of a bagel is $1. 
B)  With a price ceiling of $3.00 per bagel, the price of a bagel is $2. 
C)  With no government intervention, the equilibrium price of a bagel is $2. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 17

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton.As a result of this price support,the total subsidy paid to wheat farmers equals

Accepted Answer

A)  $4 billion. 
B)  $3 billion. 
C)  $3.5 billion. 
D)  $1.5 billion. 
E)  $4.5 billion 
A)  $4 billion. 
B)  $3 billion. 
C)  $3.5 billion. 
D)  $1.5 billion. 
E)  $4.5 billion

Question 18

In order to have an impact,a ________ must be set below the equilibrium price,and when this occurs,________.

Accepted Answer

A)  price ceiling; consumer surplus increases 
B)  price floor; consumer surplus decreases 
C)  price ceiling; producer surplus decreases 
D)  price support; total revenue increases 
E)  price support; consumer surplus increases 
A)  price ceiling; consumer surplus increases 
B)  price floor; consumer surplus decreases 
C)  price ceiling; producer surplus decreases 
D)  price support; total revenue increases 
E)  price support; consumer surplus increases

Question 19

A price floor is considered

Accepted Answer

A)  "fair" based only on the fair results view. 
B)  "fair" based only on the fair rules view. 
C)  "unfair" based on both the fair results and fair rules views. 
D)  "unfair" based only on the fair results view. 
E)  "fair" based on the fair results view and on the fair rules view. 
A)  "fair" based only on the fair results view. 
B)  "fair" based only on the fair rules view. 
C)  "unfair" based on both the fair results and fair rules views. 
D)  "unfair" based only on the fair results view. 
E)  "fair" based on the fair results view and on the fair rules view.

Question 20

A rent ceiling is

Accepted Answer

A)  fair, because it helps all renters. 
B)  fair, because it insures that low-income families can rent apartments. 
C)  fair, because it helps all landlords. 
D)  unfair. 
E)  fair, because it helps more renters than it harms. 
A)  fair, because it helps all renters. 
B)  fair, because it insures that low-income families can rent apartments. 
C)  fair, because it helps all landlords. 
D)  unfair. 
E)  fair, because it helps more renters than it harms.

A minimum wage

Is the minimum wage fair?

Suppose the equilibrium rent in Denver is $1,050.A rent ceiling of $755 per month leads to

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.

-The above figure shows a labor market with minimum wage equal to $16.In this figure,what area equals the deadweight loss?

Who gains from a price support? Who loses? Explain how the size of the gain compares to the size of the loss.

An illegal market in which the price exceeds a legally imposed price ceiling is called a

-In the figure above,if the minimum wage is $8 per hour,then

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -In the figure above,the quantity of sugar beets produced is million tons per year,and the quantity bought by consumers is million tons per year.

We know that the minimum wage causes unemployment.So,why does the government impose one?

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Which of the following is true? i.A price ceiling set below the equilibrium price decreases search activity. ii.A minimum wage is an example of a price ceiling. iii.A price support decreases the quantity consumed.

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

In a housing market with a rent ceiling set below the equilibrium rent,as time passes the supply of apartments

-The figure above illustrates the bagel market.Which of the following statements is correct?

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton.As a result of this price support,the total subsidy paid to wheat farmers equals

In order to have an impact,a must be set below the equilibrium price,and when this occurs,.

A price floor is considered

A rent ceiling is

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

A minimum wage

Is the minimum wage fair?

Suppose the equilibrium rent in Denver is $1,050.A rent ceiling of $755 per month leads to

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.

-The above figure shows a labor market with minimum wage equal to $16.In this figure,what area equals the deadweight loss?

Who gains from a price support? Who loses? Explain how the size of the gain compares to the size of the loss.

An illegal market in which the price exceeds a legally imposed price ceiling is called a

-In the figure above,if the minimum wage is $8 per hour,then

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -In the figure above,the quantity of sugar beets produced is ________ million tons per year,and the quantity bought by consumers is ________ million tons per year.

We know that the minimum wage causes unemployment.So,why does the government impose one?

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Which of the following is true? i.A price ceiling set below the equilibrium price decreases search activity. ii.A minimum wage is an example of a price ceiling. iii.A price support decreases the quantity consumed.

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

In a housing market with a rent ceiling set below the equilibrium rent,as time passes the supply of apartments

-The figure above illustrates the bagel market.Which of the following statements is correct?

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton.As a result of this price support,the total subsidy paid to wheat farmers equals

In order to have an impact,a ________ must be set below the equilibrium price,and when this occurs,________.

A price floor is considered

A rent ceiling is

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

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -In the figure above,the quantity of sugar beets produced is million tons per year,and the quantity bought by consumers is million tons per year.

In order to have an impact,a must be set below the equilibrium price,and when this occurs,.