Question 1

One likely result of a price ceiling is that:

Accepted Answer

A) a surplus of product would result. 
B) the price charged in the market would be above the equilibrium price. 
C) the price charged in the market would be the equilibrium price. 
D) the available product must be rationed. 
E) the market supply curve will shift to the right. 
A) a surplus of product would result. 
B) the price charged in the market would be above the equilibrium price. 
C) the price charged in the market would be the equilibrium price. 
D) the available product must be rationed. 
E) the market supply curve will shift to the right.

Question 2

Much of the nation's coal is extracted by strip mining.This process leaves a huge barren hole in the ground when complete and the cost of replanting the trees is approximately $10 per ton of coal.Burning the coal for electricity causes air pollution.No one knows how much damage the air pollution causes,but we know that for another $10 per ton the power plant can be outfitted with a pollution-control device.What is one measure of the true social cost of coal-fired electricity,in dollars per ton?

Accepted Answer

A) Private marginal cost plus the $10 replanting charge. 
B) Private marginal cost plus the $10 emission control charge. 
C) Only the $20 of replanting and emission control charges, because the other costs are private, not social. 
D) Private marginal cost plus the $20 of replanting and emission control charges. 
E) In order to answer this question we need to know the dollar value of the pollution. 
A) Private marginal cost plus the $10 replanting charge. 
B) Private marginal cost plus the $10 emission control charge. 
C) Only the $20 of replanting and emission control charges, because the other costs are private, not social. 
D) Private marginal cost plus the $20 of replanting and emission control charges. 
E) In order to answer this question we need to know the dollar value of the pollution.

Question 3

Assume a price floor is set above the equilibrium price.The result is a surplus.

Accepted Answer

A) True 
 B)False

Question 4

If the government prevents the market price from rising above $10,it can set a/an:

Accepted Answer

A) optimum price. 
B) minimum price. 
C) price ceiling. 
D) price floor. 
A) optimum price. 
B) minimum price. 
C) price ceiling. 
D) price floor.

Question 5

Exhibit 4-1 Supply and demand data
  
-Exhibit 4-1 shows that at a price of $30:

Accepted Answer

A) the market is in equilibrium. 
B) there will be excess quantity demanded. 
C) there will be excess quantity supplied. 
D) there is a price ceiling in effect. 
A) the market is in equilibrium. 
B) there will be excess quantity demanded. 
C) there will be excess quantity supplied. 
D) there is a price ceiling in effect.

Question 6

Which of the following would result in a temporary surplus of desk top computers at the price associated with the initial equilibrium?

Accepted Answer

A) Decrease in the price of desk top computers. 
B) Decrease in the price of laptops. 
C) Increase in the price of laptops. 
D) No change. 
A) Decrease in the price of desk top computers. 
B) Decrease in the price of laptops. 
C) Increase in the price of laptops. 
D) No change.

Question 7

Which of the following statements is not true of a market?

Accepted Answer

A) An increase in demand, with no change in supply, will increase the equilibrium price and quantity. 
B) An increase in supply, with no change in demand, will decrease the equilibrium price and the equilibrium quantity. 
C) A decrease in supply, with no change in demand, will increase the equilibrium price and decrease the equilibrium quantity. 
D) A decrease in demand, with no change in supply, will decrease the equilibrium price and quantity. 
A) An increase in demand, with no change in supply, will increase the equilibrium price and quantity. 
B) An increase in supply, with no change in demand, will decrease the equilibrium price and the equilibrium quantity. 
C) A decrease in supply, with no change in demand, will increase the equilibrium price and decrease the equilibrium quantity. 
D) A decrease in demand, with no change in supply, will decrease the equilibrium price and quantity.

Question 8

Price floors are instituted because the government wants to:

Accepted Answer

A) help consumers to switch to the new product. 
B) help people on low income. 
C) raise tax revenue. 
D) increase supply. 
A) help consumers to switch to the new product. 
B) help people on low income. 
C) raise tax revenue. 
D) increase supply.

Question 9

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?

Accepted Answer

A) A decrease in the demand for strawberries. 
B) An increase in the demand for strawberries. 
C) A decrease in the supply of strawberries. 
D) An increase in the supply of strawberries. 
A) A decrease in the demand for strawberries. 
B) An increase in the demand for strawberries. 
C) A decrease in the supply of strawberries. 
D) An increase in the supply of strawberries.

Question 10

An increase in the price of plastic raises the cost of manufacturing DVRs.As a result,the market changes to a new equilibrium because of a(n):

Accepted Answer

A) surplus of DVRs. 
B) increase in the demand for DVRs. 
C) leftward shift in the demand curve for DVRs. 
D) leftward shift in the supply curve for DVRs. 
A) surplus of DVRs. 
B) increase in the demand for DVRs. 
C) leftward shift in the demand curve for DVRs. 
D) leftward shift in the supply curve for DVRs.

Question 11

Exhibit 4-2 Supply and demand curves
  
-In Exhibit 4-2,which of the following might cause a shift from S₁ to S₂?

Accepted Answer

A) An increase in number of producers. 
B) An improvement in technology. 
C) A decrease in number of producers. 
D) An increase in consumer income. 
A) An increase in number of producers. 
B) An improvement in technology. 
C) A decrease in number of producers. 
D) An increase in consumer income.

Question 12

If the demand increases but supply decreases,then:

Accepted Answer

A) these two effects cancel each other out and there is no change in the market equilibrium. 
B) the price will increase and the quantity will depend on the magnitude of shifts. 
C) the price will increase and the quantity will decrease. 
D) the price will increase and the quantity will increase. 
E) the price will decrease and the quantity will depend on the magnitude of shifts. 
A) these two effects cancel each other out and there is no change in the market equilibrium. 
B) the price will increase and the quantity will depend on the magnitude of shifts. 
C) the price will increase and the quantity will decrease. 
D) the price will increase and the quantity will increase. 
E) the price will decrease and the quantity will depend on the magnitude of shifts.

Question 13

Suppose two goods A and B are complements.If the price of good A has increased,which of the following statements is true?

Accepted Answer

A) Demand for good B will shift to the left, there will be a temporary shortage of good A 
B)  Demand for good A will shift to the left, there will be a temporary surplus of good A. 
C)  Demand for good B will shift to the right, there will be a temporary surplus of good B. 
D)  Demand for good B will shift to the left, there will be a temporary surplus of good B. 
A) Demand for good B will shift to the left, there will be a temporary shortage of good A 
B)  Demand for good A will shift to the left, there will be a temporary surplus of good A. 
C)  Demand for good B will shift to the right, there will be a temporary surplus of good B. 
D)  Demand for good B will shift to the left, there will be a temporary surplus of good B.

Question 14

Which of the following is a property of a public good?

Accepted Answer

A) A public good is free from externalities. 
B) Many individuals benefit simultaneously. 
C) A public good is not subject to free riders. 
D) A public good is established by law. 
A) A public good is free from externalities. 
B) Many individuals benefit simultaneously. 
C) A public good is not subject to free riders. 
D) A public good is established by law.

Question 15

Which of the following are examples of positive externalities?

Accepted Answer

A) A loud noise from the neighbour's party. 
B) Greenhouse emissions from electricity generation. 
C) An unmowed lawn in a neighbourhood. 
D) A rose garden planted by a neighbour. 
A) A loud noise from the neighbour's party. 
B) Greenhouse emissions from electricity generation. 
C) An unmowed lawn in a neighbourhood. 
D) A rose garden planted by a neighbour.

Question 16

Exhibit 4-5 Supply and demand data for cars
  
-In Exhibit 4-5,assume that the government sets a price ceiling of $10 000 for cars.What effect will this price change have?

Accepted Answer

A) The quality of cars will improve. 
B) The quantity of cars demanded will fall. 
C) A black market for cars is likely to develop. 
D) The price of cars will rise. 
A) The quality of cars will improve. 
B) The quantity of cars demanded will fall. 
C) A black market for cars is likely to develop. 
D) The price of cars will rise.

Question 17

If the demand curve increases while the supply curve remains unchanged,the equilibrium price would increase.

Accepted Answer

A) True 
 B)False

Question 18

A price floor is:

Accepted Answer

A) the lowest price a producer will accept. 
B) the lowest price a consumer will pay. 
C) a minimum price set by the government above equilibrium price. 
D) a maximum price set by the government above equilibrium price 
E) usually set equal to equilibrium price. 
A) the lowest price a producer will accept. 
B) the lowest price a consumer will pay. 
C) a minimum price set by the government above equilibrium price. 
D) a maximum price set by the government above equilibrium price 
E) usually set equal to equilibrium price.

Question 19

Public goods differ from private goods in that:

Accepted Answer

A) they produce negative externalities. 
B) they are not scarce. 
C) there is no way to prevent people from consuming them even if they did not pay for the goods. 
D) their consumption must be regulated by the government. 
E) their benefits are very narrow. 
A) they produce negative externalities. 
B) they are not scarce. 
C) there is no way to prevent people from consuming them even if they did not pay for the goods. 
D) their consumption must be regulated by the government. 
E) their benefits are very narrow.

Question 20

Which of the following is a property of a public good?

Accepted Answer

A) People who do not pay do not get access to a public good. 
B) Only selected people can consume benefits. 
C) Public good is provided by the market. 
D) Users collectively consume benefits. 
A) People who do not pay do not get access to a public good. 
B) Only selected people can consume benefits. 
C) Public good is provided by the market. 
D) Users collectively consume benefits.

One likely result of a price ceiling is that:

Assume a price floor is set above the equilibrium price.The result is a surplus.

If the government prevents the market price from rising above $10,it can set a/an:

Exhibit 4-1 Supply and demand data -Exhibit 4-1 shows that at a price of $30:

Which of the following would result in a temporary surplus of desk top computers at the price associated with the initial equilibrium?

Which of the following statements is not true of a market?

Price floors are instituted because the government wants to:

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?

An increase in the price of plastic raises the cost of manufacturing DVRs.As a result,the market changes to a new equilibrium because of a(n):

Exhibit 4-2 Supply and demand curves -In Exhibit 4-2,which of the following might cause a shift from S₁ to S₂?

If the demand increases but supply decreases,then:

Suppose two goods A and B are complements.If the price of good A has increased,which of the following statements is true?

Which of the following is a property of a public good?

Which of the following are examples of positive externalities?

Exhibit 4-5 Supply and demand data for cars -In Exhibit 4-5,assume that the government sets a price ceiling of $10 000 for cars.What effect will this price change have?

If the demand curve increases while the supply curve remains unchanged,the equilibrium price would increase.

A price floor is:

Public goods differ from private goods in that:

Which of the following is a property of a public good?

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 4: Markets in action

One likely result of a price ceiling is that:

Assume a price floor is set above the equilibrium price.The result is a surplus.

If the government prevents the market price from rising above $10,it can set a/an:

Exhibit 4-1 Supply and demand data -Exhibit 4-1 shows that at a price of $30:

Which of the following would result in a temporary surplus of desk top computers at the price associated with the initial equilibrium?

Which of the following statements is not true of a market?

Price floors are instituted because the government wants to:

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?

An increase in the price of plastic raises the cost of manufacturing DVRs.As a result,the market changes to a new equilibrium because of a(n):

Exhibit 4-2 Supply and demand curves -In Exhibit 4-2,which of the following might cause a shift from S₁ to S₂?

If the demand increases but supply decreases,then:

Suppose two goods A and B are complements.If the price of good A has increased,which of the following statements is true?

Which of the following is a property of a public good?

Which of the following are examples of positive externalities?

Exhibit 4-5 Supply and demand data for cars -In Exhibit 4-5,assume that the government sets a price ceiling of $10 000 for cars.What effect will this price change have?

If the demand curve increases while the supply curve remains unchanged,the equilibrium price would increase.

A price floor is:

Public goods differ from private goods in that:

Which of the following is a property of a public good?

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters