Question 1

-The graph shows the market for holiday condos in West Palm Beach.If a rent ceiling is set at $1,700 a week,the quantity of holiday condos rented ________.

Accepted Answer

A)  is 2,000 a week 
B)  is 4,000 a week 
C)  is 5,000 a week 
D)  is some amount, but more information is needed to determine the amount. 
E)  depends on the black market 
A)  is 2,000 a week 
B)  is 4,000 a week 
C)  is 5,000 a week 
D)  is some amount, but more information is needed to determine the amount. 
E)  depends on the black market

Question 2

A rent ceiling creates a deadweight loss

Accepted Answer

A)  if it is set below the equilibrium rent. 
B)  if it is set equal to the equilibrium rent. 
C)  if it set above the equilibrium rent. 
D)  if it decreases the taxes the government collects in the housing market. 
E)  never, because if it did create a deadweight loss, the government would not impose it. 
A)  if it is set below the equilibrium rent. 
B)  if it is set equal to the equilibrium rent. 
C)  if it set above the equilibrium rent. 
D)  if it decreases the taxes the government collects in the housing market. 
E)  never, because if it did create a deadweight loss, the government would not impose it.

Question 3

Which of the following is an example of a price floor?

Accepted Answer

A)  a law passed in a city to lower apartment rents by setting the maximum price that can be charged for rent 
B)  an equilibrium price 
C)  a minimum wage law 
D)  a law setting the highest price that can legally be charged for a gallon of gasoline. 
E)  None of the above answers give examples of a price floor. 
A)  a law passed in a city to lower apartment rents by setting the maximum price that can be charged for rent 
B)  an equilibrium price 
C)  a minimum wage law 
D)  a law setting the highest price that can legally be charged for a gallon of gasoline. 
E)  None of the above answers give examples of a price floor.

Question 4

The people who immediately benefit from a minimum wage are

Accepted Answer

A)  employers who now pay the minimum wage. 
B)  those people who enter the labor force to search for minimum wage jobs. 
C)  the workers who retain their jobs after enactment of the minimum wage. 
D)  everyone, both demanders and suppliers, because the minimum wage benefits everyone. 
E)  all workers. 
A)  employers who now pay the minimum wage. 
B)  those people who enter the labor force to search for minimum wage jobs. 
C)  the workers who retain their jobs after enactment of the minimum wage. 
D)  everyone, both demanders and suppliers, because the minimum wage benefits everyone. 
E)  all workers.

Question 5

Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour.An increase in the minimum wage to $7.50 per hour leads to

Accepted Answer

A)  a surplus of housekeepers. 
B)  a shortage of housekeepers. 
C)  no change in the market for housekeepers. 
D)  an increase in the quantity of housekeepers supplied. 
E)  unemployment of housekeepers. 
A)  a surplus of housekeepers. 
B)  a shortage of housekeepers. 
C)  no change in the market for housekeepers. 
D)  an increase in the quantity of housekeepers supplied. 
E)  unemployment of housekeepers.

Question 6

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the total subsidy paid to tomato farmers?

Accepted Answer

A)  area E 
B)  area B + area C + area D + area F 
C)  area C + area D + area E + area G 
D)  area A 
E)  area F 
A)  area E 
B)  area B + area C + area D + area F 
C)  area C + area D + area E + area G 
D)  area A 
E)  area F

Question 7

An effective price support ________ producers and ________ a deadweight loss.

Accepted Answer

A)  has no effect on; does not create 
B)  benefits; creates 
C)  harms; creates 
D)  benefits; does not create 
E)  harms; does not create 
A)  has no effect on; does not create 
B)  benefits; creates 
C)  harms; creates 
D)  benefits; does not create 
E)  harms; does not create

Question 8

The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

Accepted Answer

A)  Yes 
B)  No 
C)  Only if the supply of labor is perfectly inelastic 
D)  Only if the supply of labor is perfectly elastic 
E)  Only if employment exceeds the efficient amount 
A)  Yes 
B)  No 
C)  Only if the supply of labor is perfectly inelastic 
D)  Only if the supply of labor is perfectly elastic 
E)  Only if employment exceeds the efficient amount

Question 9

Suppose that apartments rent for $1,300 a month in San Francisco,California and $850 a month in Los Angeles,California.If the state of California passes a state-wide rent ceiling for apartments of $1,100 a month,what occurs in the two cities?

Accepted Answer

The rent ceiling is below the equilibriu

Question 10

New York City,which has had a rent ceiling law for more than sixty years,has many abandoned apartment buildings throughout the city.Which of the following explains this?

Accepted Answer

A)  Few workers with jobs in the city want to live in there because of pollution. 
B)  No building permits for new apartment buildings have been issued for over fifty years. 
C)  Once any building gets so old, it is abandoned. 
D)  Landlords have no incentive to finance maintenance and remodeling of apartment buildings. 
E)  Rent ceilings make the construction of new buildings so profitable that old buildings are simply abandoned. 
A)  Few workers with jobs in the city want to live in there because of pollution. 
B)  No building permits for new apartment buildings have been issued for over fifty years. 
C)  Once any building gets so old, it is abandoned. 
D)  Landlords have no incentive to finance maintenance and remodeling of apartment buildings. 
E)  Rent ceilings make the construction of new buildings so profitable that old buildings are simply abandoned.

Question 11

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

Accepted Answer

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

Question 12

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition.The with no government intervention,the equilibrium price is ________ and the equilibrium quantity is ________.

Accepted Answer

A)  $15 per ton; 100 million tons 
B)  $14 per ton; 250 million tons 
C)  $12 per ton; 300 million tons 
D)  $12 per ton; 250 million tons 
E)  $15 per ton; 400 million tons 
A)  $15 per ton; 100 million tons 
B)  $14 per ton; 250 million tons 
C)  $12 per ton; 300 million tons 
D)  $12 per ton; 250 million tons 
E)  $15 per ton; 400 million tons

Question 13

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

Accepted Answer

A)  both increase. 
B)  both decrease, but generally not to zero. 
C)  do not change. 
D)  are eliminated. 
E)  are both totally converted into deadweight loss. 
A)  both increase. 
B)  both decrease, but generally not to zero. 
C)  do not change. 
D)  are eliminated. 
E)  are both totally converted into deadweight loss.

Question 14

A minimum wage increases unemployment by

Accepted Answer

A)  increasing the quantity of labor demanded. 
B)  decreasing the quantity of labor demanded. 
C)  shifting only the labor supply curve rightward. 
D)  shifting only the labor demand curve leftward. 
E)  shifting the labor supply curve rightward and shifting the labor demand curve leftward. 
A)  increasing the quantity of labor demanded. 
B)  decreasing the quantity of labor demanded. 
C)  shifting only the labor supply curve rightward. 
D)  shifting only the labor demand curve leftward. 
E)  shifting the labor supply curve rightward and shifting the labor demand curve leftward.

Question 15

A minimum wage set above the equilibrium wage rate

Accepted Answer

A)  increases the quantity of labor services supplied. 
B)  decreases the quantity of labor services supplied. 
C)  has no effect on the quantity of labor services supplied. 
D)  shifts the labor supply curve rightward. 
E)  shifts the labor supply curve leftward. 
A)  increases the quantity of labor services supplied. 
B)  decreases the quantity of labor services supplied. 
C)  has no effect on the quantity of labor services supplied. 
D)  shifts the labor supply curve rightward. 
E)  shifts the labor supply curve leftward.

Question 16

-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.The quantity produced once the price support is in place is

Accepted Answer

A)  400 million tons. 
B)  300 million tons. 
C)  100 million tons. 
D)  250 million tons. 
E)  200 million tons. 
A)  400 million tons. 
B)  300 million tons. 
C)  100 million tons. 
D)  250 million tons. 
E)  200 million tons.

Question 17

A price support set above the equilibrium price does which of the following?
i.decreases producer surplus
ii.decreases consumer surplus
iii.decreases the marginal cost of the last unit produced

Accepted Answer

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

Question 18

A stated goal of a minimum wage is to

Accepted Answer

A)  increase government tax revenue. 
B)  stabilize production costs. 
C)  boost the incomes of low-wage earners. 
D)  decrease business profits. 
E)  increase business profits by making the labor market more efficient. 
A)  increase government tax revenue. 
B)  stabilize production costs. 
C)  boost the incomes of low-wage earners. 
D)  decrease business profits. 
E)  increase business profits by making the labor market more efficient.

Question 19

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

Accepted Answer

An increase in the minimum wage creates

Question 20

In a housing market with no rent ceilings,the equilibrium rent is that for which the quantity of apartments demanded

Accepted Answer

A)  equals the quantity supplied. 
B)  is greater than the quantity supplied. 
C)  is less than the quantity supplied. 
D)  might be greater than, equal to, or less than the quantity supplied depending on whether the supply curve is upward sloping, horizontal, or vertical. 
E)  None of the above answers is correct because without rent ceilings there is no equilibrium rent. 
A)  equals the quantity supplied. 
B)  is greater than the quantity supplied. 
C)  is less than the quantity supplied. 
D)  might be greater than, equal to, or less than the quantity supplied depending on whether the supply curve is upward sloping, horizontal, or vertical. 
E)  None of the above answers is correct because without rent ceilings there is no equilibrium rent.

-The graph shows the market for holiday condos in West Palm Beach.If a rent ceiling is set at $1,700 a week,the quantity of holiday condos rented ________.

A rent ceiling creates a deadweight loss

Which of the following is an example of a price floor?

The people who immediately benefit from a minimum wage are

Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour.An increase in the minimum wage to $7.50 per hour leads to

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the total subsidy paid to tomato farmers?

An effective price support producers and a deadweight loss.

The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

Suppose that apartments rent for $1,300 a month in San Francisco,California and $850 a month in Los Angeles,California.If the state of California passes a state-wide rent ceiling for apartments of $1,100 a month,what occurs in the two cities?

New York City,which has had a rent ceiling law for more than sixty years,has many abandoned apartment buildings throughout the city.Which of the following explains this?

A minimum wage set above the equilibrium wage will the quantity of labor demanded and the quantity of labor supplied.

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition.The with no government intervention,the equilibrium price is and the equilibrium quantity is .

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

A minimum wage increases unemployment by

A minimum wage set above the equilibrium wage rate

-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.The quantity produced once the price support is in place is

A price support set above the equilibrium price does which of the following? i.decreases producer surplus ii.decreases consumer surplus iii.decreases the marginal cost of the last unit produced

A stated goal of a minimum wage is to

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

In a housing market with no rent ceilings,the equilibrium rent is that for which the quantity of apartments demanded

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 graph shows the market for holiday condos in West Palm Beach.If a rent ceiling is set at $1,700 a week,the quantity of holiday condos rented ________.

A rent ceiling creates a deadweight loss

Which of the following is an example of a price floor?

The people who immediately benefit from a minimum wage are

Suppose the current equilibrium wage rate for housekeepers is $8.60 per hour.An increase in the minimum wage to $7.50 per hour leads to

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the total subsidy paid to tomato farmers?

An effective price support ________ producers and ________ a deadweight loss.

The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

Suppose that apartments rent for $1,300 a month in San Francisco,California and $850 a month in Los Angeles,California.If the state of California passes a state-wide rent ceiling for apartments of $1,100 a month,what occurs in the two cities?

New York City,which has had a rent ceiling law for more than sixty years,has many abandoned apartment buildings throughout the city.Which of the following explains this?

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition.The with no government intervention,the equilibrium price is ________ and the equilibrium quantity is ________.

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

A minimum wage increases unemployment by

A minimum wage set above the equilibrium wage rate

-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.The quantity produced once the price support is in place is

A price support set above the equilibrium price does which of the following? i.decreases producer surplus ii.decreases consumer surplus iii.decreases the marginal cost of the last unit produced

A stated goal of a minimum wage is to

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

In a housing market with no rent ceilings,the equilibrium rent is that for which the quantity of apartments demanded

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

An effective price support producers and a deadweight loss.

A minimum wage set above the equilibrium wage will the quantity of labor demanded and the quantity of labor supplied.

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition.The with no government intervention,the equilibrium price is and the equilibrium quantity is .