Question 1

A price floor

Accepted Answer

A)  is the highest price at which it is legal to trade a particular good, service, or factor of production. 
B)  is the lowest price at which it is legal to trade a particular good, service, or factor of production. 
C)  is an illegal price to charge. 
D)  is the equilibrium price when the stock market crashes. 
E)  is the lowest price for which the quantity demanded equals the quantity supplied. 
A)  is the highest price at which it is legal to trade a particular good, service, or factor of production. 
B)  is the lowest price at which it is legal to trade a particular good, service, or factor of production. 
C)  is an illegal price to charge. 
D)  is the equilibrium price when the stock market crashes. 
E)  is the lowest price for which the quantity demanded equals the quantity supplied.

Question 2

-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.As a result,there is a

Accepted Answer

A)  shortage equal to 150,000 jackets. 
B)  surplus equal to 150,000 jackets. 
C)  surplus equal to 300,000 jackets. 
D)  shortage equal to 250,000 jackets. 
E)  shortage equal to 100,000 jackets. 
A)  shortage equal to 150,000 jackets. 
B)  surplus equal to 150,000 jackets. 
C)  surplus equal to 300,000 jackets. 
D)  shortage equal to 250,000 jackets. 
E)  shortage equal to 100,000 jackets.

Question 3

-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 4

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 5

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 6

Which of the following is true?
i.A price ceiling is inefficient but fair.
ii.A price floor is inefficient and unfair.
iii.A price support increases the quantity produced.

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 7

Suppose the government imposes a price support that is above the equilibrium price.As a result,

Accepted Answer

A)  total revenue increases. 
B)  consumer surplus increases. 
C)  the marginal cost of the last unit produced decreases. 
D)  the government has effectively imposed a price ceiling. 
E)  the subsidy the government pays decreases. 
A)  total revenue increases. 
B)  consumer surplus increases. 
C)  the marginal cost of the last unit produced decreases. 
D)  the government has effectively imposed a price ceiling. 
E)  the subsidy the government pays decreases.

Question 8

-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 bought by domestic users once the price support is in place is

Accepted Answer

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

Question 9

Rent ceilings

Accepted Answer

A)  increase search activity. 
B)  result in surpluses. 
C)  create efficiency. 
D)  benefit producers. 
E)  have no effect if they are set below the equilibrium rent. 
A)  increase search activity. 
B)  result in surpluses. 
C)  create efficiency. 
D)  benefit producers. 
E)  have no effect if they are set below the equilibrium rent.

Question 10

A price floor

Accepted Answer

A)  changes the equilibrium price if it is imposed in black markets. 
B)  changes the price and quantity if it is set below the equilibrium price. 
C)  changes the price and quantity if it is set above the equilibrium price. 
D)  does not create a black market if it is set above the equilibrium price. 
E)  changes the price and quantity only if it equals the equilibrium price. 
A)  changes the equilibrium price if it is imposed in black markets. 
B)  changes the price and quantity if it is set below the equilibrium price. 
C)  changes the price and quantity if it is set above the equilibrium price. 
D)  does not create a black market if it is set above the equilibrium price. 
E)  changes the price and quantity only if it equals the equilibrium price.

Question 11

A minimum wage law

Accepted Answer

A)  lowers the wage rate of workers who are able to get a job. 
B)  increases employment. 
C)  increases the time spent searching by workers who cannot find a job. 
D)  creates efficiency in the labor market. 
E)  must be set below the equilibrium wage rate in order to have an impact. 
A)  lowers the wage rate of workers who are able to get a job. 
B)  increases employment. 
C)  increases the time spent searching by workers who cannot find a job. 
D)  creates efficiency in the labor market. 
E)  must be set below the equilibrium wage rate in order to have an impact.

Question 12

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 13

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 14

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 15

-The graph shows the market for ski chalets in Aspen.The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets.If the rent ceiling is set at $1,900 a week,then there is ________.

Accepted Answer

A)  a shortage of 3,000 chalets a week 
B)  a surplus of 3,000 chalets a week 
C)  neither a shortage nor surplus of chalets 
D)  a shortage of 6,000 chalets a week 
E)  a surplus of 6,000 chalets a week. 
A)  a shortage of 3,000 chalets a week 
B)  a surplus of 3,000 chalets a week 
C)  neither a shortage nor surplus of chalets 
D)  a shortage of 6,000 chalets a week 
E)  a surplus of 6,000 chalets a week.

Question 16

A price ceiling

Accepted Answer

A)  is an illegal price. 
B)  is the price that exists in a black market. 
C)  is the maximum price that can legally be charged. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  is an illegal price. 
B)  is the price that exists in a black market. 
C)  is the maximum price that can legally be charged. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 17

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 18

An efficient allocation of labor occurs when the

Accepted Answer

A)  marginal benefit to workers exceeds the marginal benefit to firms. 
B)  marginal benefit to firms exceeds the marginal benefit to workers. 
C)  marginal cost to workers is equal to the marginal benefit to firms. 
D)  marginal cost and marginal benefit of both workers and the firms are equal to zero. 
E)  marginal benefit of workers exceeds the marginal cost to firms by as much as possible. 
A)  marginal benefit to workers exceeds the marginal benefit to firms. 
B)  marginal benefit to firms exceeds the marginal benefit to workers. 
C)  marginal cost to workers is equal to the marginal benefit to firms. 
D)  marginal cost and marginal benefit of both workers and the firms are equal to zero. 
E)  marginal benefit of workers exceeds the marginal cost to firms by as much as possible.

Question 19

-The demand and supply schedules for pizza are in the table above.A price ceiling of $4 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 20

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

A price floor

-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.As a result,there is a

-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 .

An effective price support producers and a deadweight loss.

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

Which of the following is true? i.A price ceiling is inefficient but fair. ii.A price floor is inefficient and unfair. iii.A price support increases the quantity produced.

Suppose the government imposes a price support that is above the equilibrium price.As a result,

-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 bought by domestic users once the price support is in place is

Rent ceilings

A price floor

A minimum wage law

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.

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

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

-The graph shows the market for ski chalets in Aspen.The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets.If the rent ceiling is set at $1,900 a week,then there is ________.

A price ceiling

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.

An efficient allocation of labor occurs when the

-The demand and supply schedules for pizza are in the table above.A price ceiling of $4 per slice results in

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

Getting Started

The Usand 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 price floor

-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.As a result,there is a

-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 ________.

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

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

Which of the following is true? i.A price ceiling is inefficient but fair. ii.A price floor is inefficient and unfair. iii.A price support increases the quantity produced.

Suppose the government imposes a price support that is above the equilibrium price.As a result,

-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 bought by domestic users once the price support is in place is

Rent ceilings

A price floor

A minimum wage law

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.

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

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

-The graph shows the market for ski chalets in Aspen.The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets.If the rent ceiling is set at $1,900 a week,then there is ________.

A price ceiling

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.

An efficient allocation of labor occurs when the

-The demand and supply schedules for pizza are in the table above.A price ceiling of $4 per slice results in

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

Getting Started

The Usand 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

-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 .

An effective price support producers and a deadweight loss.

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.

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.