Question 1

-The above figure shows a labor market with minimum wage equal to $16.In this figure,after taking account of search costs,what area equals the workers' surplus?

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 2

An increase in the minimum wage to $15 per hour would lead to

Accepted Answer

A)  an increase in search activity for many workers. 
B)  a decrease in search activity for many workers. 
C)  a decrease in unemployment. 
D)  no change in unemployment. 
E)  no change in employment. 
A)  an increase in search activity for many workers. 
B)  a decrease in search activity for many workers. 
C)  a decrease in unemployment. 
D)  no change in unemployment. 
E)  no change in employment.

Question 3

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

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 4

A minimum wage set above the equilibrium wage rate creates

Accepted Answer

A)  efficiency because it increases most workers' wages. 
B)  efficiency because few workers lose their jobs. 
C)  efficiency because workers can earn a living wage. 
D)  inefficiency and a deadweight loss. 
E)  inefficiency because it creates excessive employment. 
A)  efficiency because it increases most workers' wages. 
B)  efficiency because few workers lose their jobs. 
C)  efficiency because workers can earn a living wage. 
D)  inefficiency and a deadweight loss. 
E)  inefficiency because it creates excessive employment.

Question 5

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

Accepted Answer

A)  quantity of the surplus crop multiplied by the support price. 
B)  quantity of the crop produced multiplied by the support price. 
C)  quantity of the crop purchased by domestic users multiplied by the support price. 
D)  quantity of the surplus crop multiplied by the equilibrium price. 
E)  quantity of the crop purchased by domestic users multiplied by the equilibrium price. 
A)  quantity of the surplus crop multiplied by the support price. 
B)  quantity of the crop produced multiplied by the support price. 
C)  quantity of the crop purchased by domestic users multiplied by the support price. 
D)  quantity of the surplus crop multiplied by the equilibrium price. 
E)  quantity of the crop purchased by domestic users multiplied by the equilibrium price.

Question 6

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

Accepted Answer

A)  when the market is at its equilibrium, with no minimum wage 
B)  when a minimum wage of $4 an hour is imposed 
C)  when a minimum wage of $6 an hour is imposed 
D)  when a minimum wage of $8 an hour is imposed 
E)  None of the above because the market will adjust so that there is no unemployment. 
A)  when the market is at its equilibrium, with no minimum wage 
B)  when a minimum wage of $4 an hour is imposed 
C)  when a minimum wage of $6 an hour is imposed 
D)  when a minimum wage of $8 an hour is imposed 
E)  None of the above because the market will adjust so that there is no unemployment.

Question 7

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

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 8

Suppose that the government imposes a price ceiling on gasoline that is below the equilibrium price.The black market for gasoline is ________ market in which the price ________ ceiling price.

Accepted Answer

A)  a legal; exceeds the 
B)  an illegal; exceeds the 
C)  a legal; is less than the 
D)  an illegal; is less than the 
E)  an illegal; equals 
A)  a legal; exceeds the 
B)  an illegal; exceeds the 
C)  a legal; is less than the 
D)  an illegal; is less than the 
E)  an illegal; equals

Question 9

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 $20 per ton,

Accepted Answer

A)  the market price increases. 
B)  the market price decreases. 
C)  marginal cost decreases. 
D)  consumer surplus increases. 
E)  the deadweight loss is decreased. 
A)  the market price increases. 
B)  the market price decreases. 
C)  marginal cost decreases. 
D)  consumer surplus increases. 
E)  the deadweight loss is decreased.

Question 10

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour.
-The figure above shows that the lowest wage rate for which someone is willing to work is

Accepted Answer

A)  $3 an hour. 
B)  $5 an hour. 
C)  $6 an hour. 
D)  $7 an hour. 
E)  $4 an hour. 
A)  $3 an hour. 
B)  $5 an hour. 
C)  $6 an hour. 
D)  $7 an hour. 
E)  $4 an hour.

Question 11

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,the

Accepted Answer

A)  quantity supplied of milk falls short of the quantity demanded. 
B)  quantity supplied of milk exceeds the quantity demanded. 
C)  supply increases. 
D)  demand decreases. 
E)  price of milk remains $4 per gallon. 
A)  quantity supplied of milk falls short of the quantity demanded. 
B)  quantity supplied of milk exceeds the quantity demanded. 
C)  supply increases. 
D)  demand decreases. 
E)  price of milk remains $4 per gallon.

Question 12

-In the figure above,if the minimum wage rate is $8 per hour,then after taking account of resources lost in job search,the workers' surplus is the area ________ and the firms' surplus is the area ________.

Accepted Answer

A)  e; c 
B)  d; b 
C)  a; f 
D)  f; a 
E)  a + b + c + d + e; f 
A)  e; c 
B)  d; b 
C)  a; f 
D)  f; a 
E)  a + b + c + d + e; f

Question 13

A rent ceiling in a housing market

Accepted Answer

A)  makes all rents lower than the ceiling illegal to charge. 
B)  is set above the equilibrium rent in order to have an effect. 
C)  increases the time people spend searching for housing. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  makes all rents lower than the ceiling illegal to charge. 
B)  is set above the equilibrium rent in order to have an effect. 
C)  increases the time people spend searching for housing. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 14

The surplus created by a price floor will likely be

Accepted Answer

A)  smaller if the good is a necessity. 
B)  larger if the good is addictive. 
C)  smaller if the good is a luxury. 
D)  unaffected by the time that has elapsed since the price ceiling is implemented. 
E)  None of the above answers is correct. 
A)  smaller if the good is a necessity. 
B)  larger if the good is addictive. 
C)  smaller if the good is a luxury. 
D)  unaffected by the time that has elapsed since the price ceiling is implemented. 
E)  None of the above answers is correct.

Question 15

A black market

Accepted Answer

A)  is legal only when it is associated with government price ceilings. 
B)  is defined as the deadweight loss associated with taxes. 
C)  benefits no one. 
D)  is a potential outcome of a price ceiling. 
E)  is always legal. 
A)  is legal only when it is associated with government price ceilings. 
B)  is defined as the deadweight loss associated with taxes. 
C)  benefits no one. 
D)  is a potential outcome of a price ceiling. 
E)  is always legal.

Question 16

Suppose that producers are richer than consumers.Is a price support program fair? Explain your answer.

Accepted Answer

A price support program is unfair.It is

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.To keep the price at this level,the government will ________ million tons of wheat.

Accepted Answer

A)  purchase 300 
B)  sell 400 
C)  purchase 100 
D)  purchase 250 
E)  sell 300 
A)  purchase 300 
B)  sell 400 
C)  purchase 100 
D)  purchase 250 
E)  sell 300

Question 18

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

Accepted Answer

A)  a surplus of 20 slices of pizza. 
B)  a shortage of 20 slices of pizza. 
C)  a shortage of 40 slices of pizza. 
D)  a shortage of 60 slices of pizza. 
E)  neither a shortage nor a surplus. 
A)  a surplus of 20 slices of pizza. 
B)  a shortage of 20 slices of pizza. 
C)  a shortage of 40 slices of pizza. 
D)  a shortage of 60 slices of pizza. 
E)  neither a shortage nor a surplus.

Question 19

People who benefit from a rent ceiling include

Accepted Answer

A)  all landlords. 
B)  taxpayers. 
C)  tenants who have a rent-controlled apartment. 
D)  potential tenants, that is, people looking for apartments. 
E)  all landlords and some tenants. 
A)  all landlords. 
B)  taxpayers. 
C)  tenants who have a rent-controlled apartment. 
D)  potential tenants, that is, people looking for apartments. 
E)  all landlords and some tenants.

Question 20

When a price ceiling below the equilibrium price is imposed on a good,production of the good

Accepted Answer

A)  increases. 
B)  decreases. 
C)  does not change. 
D)  is frozen at the pre-ceiling level. 
E)  either increases or decreases depending on whether the supply of the good increases or decreases when the price ceiling is imposed. 
A)  increases. 
B)  decreases. 
C)  does not change. 
D)  is frozen at the pre-ceiling level. 
E)  either increases or decreases depending on whether the supply of the good increases or decreases when the price ceiling is imposed.

-The above figure shows a labor market with minimum wage equal to $16.In this figure,after taking account of search costs,what area equals the workers' surplus?

An increase in the minimum wage to $15 per hour would lead to

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

A minimum wage set above the equilibrium wage rate creates

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

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

Suppose that the government imposes a price ceiling on gasoline that is below the equilibrium price.The black market for gasoline is market in which the price ceiling price.

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 $20 per ton,

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -The figure above shows that the lowest wage rate for which someone is willing to work is

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,the

-In the figure above,if the minimum wage rate is $8 per hour,then after taking account of resources lost in job search,the workers' surplus is the area and the firms' surplus is the area .

A rent ceiling in a housing market

The surplus created by a price floor will likely be

A black market

Suppose that producers are richer than consumers.Is a price support program fair? Explain your answer.

-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.To keep the price at this level,the government will ________ million tons of wheat.

Price (dollars per slice of pizza) Quantity supplied (slices of pizza per week) Quantity demanded (slices of pizza per week) 1 10 50 2 20 40 3 30 30 4 40 20 5 50 10 -The demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

People who benefit from a rent ceiling include

When a price ceiling below the equilibrium price is imposed on a good,production of the good

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

-The above figure shows a labor market with minimum wage equal to $16.In this figure,after taking account of search costs,what area equals the workers' surplus?

An increase in the minimum wage to $15 per hour would lead to

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

A minimum wage set above the equilibrium wage rate creates

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

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

Suppose that the government imposes a price ceiling on gasoline that is below the equilibrium price.The black market for gasoline is ________ market in which the price ________ ceiling price.

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 $20 per ton,

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -The figure above shows that the lowest wage rate for which someone is willing to work is

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,the

-In the figure above,if the minimum wage rate is $8 per hour,then after taking account of resources lost in job search,the workers' surplus is the area ________ and the firms' surplus is the area ________.

A rent ceiling in a housing market

The surplus created by a price floor will likely be

A black market

Suppose that producers are richer than consumers.Is a price support program fair? Explain your answer.

-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.To keep the price at this level,the government will ________ million tons of wheat.

Price (dollars per slice of pizza) Quantity supplied (slices of pizza per week) Quantity demanded (slices of pizza per week) 1 10 50 2 20 40 3 30 30 4 40 20 5 50 10 -The demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

People who benefit from a rent ceiling include

When a price ceiling below the equilibrium price is imposed on a good,production of the good

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

Suppose that the government imposes a price ceiling on gasoline that is below the equilibrium price.The black market for gasoline is market in which the price ceiling price.

-In the figure above,if the minimum wage rate is $8 per hour,then after taking account of resources lost in job search,the workers' surplus is the area and the firms' surplus is the area .