Question 1

A rent ceiling on housing creates a problem of allocating the available housing units because

Accepted Answer

A)  the demand for housing decreases and the demand curve shifts leftward. 
B)  the supply of housing increases and the supply curve shifts rightward. 
C)  a shortage of apartments occurs. 
D)  a surplus of apartments occurs. 
E)  it eliminates search, which is one of the major ways housing units are allocated. 
A)  the demand for housing decreases and the demand curve shifts leftward. 
B)  the supply of housing increases and the supply curve shifts rightward. 
C)  a shortage of apartments occurs. 
D)  a surplus of apartments occurs. 
E)  it eliminates search, which is one of the major ways housing units are allocated.

Question 2

Which of the following decrease the deadweight loss from a rent ceiling set below the equilibrium rent?
i.lowering the ceiling
ii.dedicating more resources to enforcement of the ceiling
iii.raising the ceiling

Accepted Answer

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

Question 3

With a price support program,who receives a subsidy?

Accepted Answer

A)  only consumers 
B)  only producers 
C)  the government 
D)  importers 
E)  both consumers and producers receive a subsidy 
A)  only consumers 
B)  only producers 
C)  the government 
D)  importers 
E)  both consumers and producers receive a subsidy

Question 4

-The above figure shows the market for finish carpenters in Bozeman.If there is a minimum wage set at $18,what is true?

Accepted Answer

A)  The lowest wage for which someone is willing to work is $18 an hour. 
B)  The quantity of jobs increases to 400. 
C)  The lowest wage for which someone is willing to work is $20 an hour. 
D)  200 workers are employed. 
E)  The quantity of jobs demanded is more than the quantity supplied. 
A)  The lowest wage for which someone is willing to work is $18 an hour. 
B)  The quantity of jobs increases to 400. 
C)  The lowest wage for which someone is willing to work is $20 an hour. 
D)  200 workers are employed. 
E)  The quantity of jobs demanded is more than the quantity supplied.

Question 5

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 6

The methods that governments use to support farmers vary,but they almost always involve some or all the following methods EXCEPT

Accepted Answer

A)  pay farmers a subsidy. 
B)  introduce a price floor. 
C)  isolate the domestic market from global competition. 
D)  tax farmers. 
E)  use price supports. 
A)  pay farmers a subsidy. 
B)  introduce a price floor. 
C)  isolate the domestic market from global competition. 
D)  tax farmers. 
E)  use price supports.

Question 7

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

Accepted Answer

A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
E)  unit elastic; unit elastic 
A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
E)  unit elastic; unit elastic

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.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 9

-In the figure above,if the wage rate is $6 per hour,then the

Accepted Answer

A)  firms' surplus is the area d + e + f. 
B)  workers' surplus is the area a + b + c. 
C)  deadweight loss equals zero. 
D)  Only answers A and C are correct. 
E)  Answers A, B, and C are correct. 
A)  firms' surplus is the area d + e + f. 
B)  workers' surplus is the area a + b + c. 
C)  deadweight loss equals zero. 
D)  Only answers A and C are correct. 
E)  Answers A, B, and C are correct.

Question 10

-The above figure shows the market for finish carpenters in Bozeman.If there is a minimum wage set at $18,which of the following statements is true?

Accepted Answer

A)  Firms' surplus increase with the minimum wage. 
B)  Workers who retain their jobs have their wages rise. 
C)  The market is efficient. 
D)  The quantity supplied of workers is less that quantity demanded. 
E)  Unemployment decreases because firms employ their workers more carefully. 
A)  Firms' surplus increase with the minimum wage. 
B)  Workers who retain their jobs have their wages rise. 
C)  The market is efficient. 
D)  The quantity supplied of workers is less that quantity demanded. 
E)  Unemployment decreases because firms employ their workers more carefully.

Question 11

Both price supports and a price floor can

Accepted Answer

A)  create a deadweight loss. 
B)  decrease output below the equilibrium quantity. 
C)  decrease the price below the equilibrium price. 
D)  increase consumer surplus. 
E)  have no effect on producer surplus. 
A)  create a deadweight loss. 
B)  decrease output below the equilibrium quantity. 
C)  decrease the price below the equilibrium price. 
D)  increase consumer surplus. 
E)  have no effect on producer surplus.

Question 12

-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.Which of the following statements is true?

Accepted Answer

A)  After taking account of the resources lost in search, consumer surplus increases when the price ceiling is in place. 
B)  There will be a surplus of jackets. 
C)  Because the price of a jacket is lowered, consumers end up buying more jackets with the price ceiling than without it. 
D)  Producer surplus decreases if there is a price ceiling. 
E)  The quantity supplied of jackets is greater that quantity demanded when there is a price ceiling. 
A)  After taking account of the resources lost in search, consumer surplus increases when the price ceiling is in place. 
B)  There will be a surplus of jackets. 
C)  Because the price of a jacket is lowered, consumers end up buying more jackets with the price ceiling than without it. 
D)  Producer surplus decreases if there is a price ceiling. 
E)  The quantity supplied of jackets is greater that quantity demanded when there is a price ceiling.

Question 13

One result of a minimum wage is

Accepted Answer

A)  illegal hiring of people at wages below the minimum wage. 
B)  more people with jobs. 
C)  a change in the equilibrium wage. 
D)  lower costs paid by firms. 
E)  fewer people searching for work because they realize that firms have decreased the number of people hired. 
A)  illegal hiring of people at wages below the minimum wage. 
B)  more people with jobs. 
C)  a change in the equilibrium wage. 
D)  lower costs paid by firms. 
E)  fewer people searching for work because they realize that firms have decreased the number of people hired.

Question 14

-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 15

Which of the following describes a difference between a price support and a price ceiling?

Accepted Answer

A)  A price support creates a deadweight loss while a price ceiling does not. 
B)  A price ceiling is a regulated price while a price support is a regulated quantity. 
C)  A price support decreases the quantity while a price ceiling does not. 
D)  A price ceiling increases the price above the equilibrium price while a price support does not. 
E)  A price support attempts to raise the price above the equilibrium price while a price ceiling does not. 
A)  A price support creates a deadweight loss while a price ceiling does not. 
B)  A price ceiling is a regulated price while a price support is a regulated quantity. 
C)  A price support decreases the quantity while a price ceiling does not. 
D)  A price ceiling increases the price above the equilibrium price while a price support does not. 
E)  A price support attempts to raise the price above the equilibrium price while a price ceiling does not.

Question 16

Following a major natural disaster that destroys housing,a rent ceiling ________ be an effective policy to increase the quantity of more affordable housing for displaced residents because it would ________.

Accepted Answer

A)  would not; discourage rebuilding and result in a shortage 
B)  would not; cause the quantity supplied to exceed the quantity demanded 
C)  would; cause increased search activity 
D)  would; create a black market that would result in a lower rent 
E)  would; encourage a greater quantity supplied 
A)  would not; discourage rebuilding and result in a shortage 
B)  would not; cause the quantity supplied to exceed the quantity demanded 
C)  would; cause increased search activity 
D)  would; create a black market that would result in a lower rent 
E)  would; encourage a greater quantity supplied

Question 17

The unemployment caused by minimum wage would be larger if

Accepted Answer

A)  both labor demand and labor supply are more elastic. 
B)  both labor demand and labor supply are more inelastic. 
C)  minimum wage is set equal to the equilibrium wage rate. 
D)  minimum wage is set below the equilibrium wage rate. 
E)  both labor demand and labor supply are perfectly inelastic. 
A)  both labor demand and labor supply are more elastic. 
B)  both labor demand and labor supply are more inelastic. 
C)  minimum wage is set equal to the equilibrium wage rate. 
D)  minimum wage is set below the equilibrium wage rate. 
E)  both labor demand and labor supply are perfectly inelastic.

Question 18

A minimum wage set above the equilibrium wage

Accepted Answer

A)  decreases the deadweight loss in the market. 
B)  decreases the workers' surplus because workers must spend resources looking for jobs. 
C)  increases the firm's surplus. 
D)  increases the market's efficiency. 
E)  has no effect on the market. 
A)  decreases the deadweight loss in the market. 
B)  decreases the workers' surplus because workers must spend resources looking for jobs. 
C)  increases the firm's surplus. 
D)  increases the market's efficiency. 
E)  has no effect on the market.

Question 19

Which of the following results from a price ceiling?
i.increased search activity
ii.surplus
iii.black market

Accepted Answer

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

A rent ceiling on housing creates a problem of allocating the available housing units because

Which of the following decrease the deadweight loss from a rent ceiling set below the equilibrium rent? i.lowering the ceiling ii.dedicating more resources to enforcement of the ceiling iii.raising the ceiling

With a price support program,who receives a subsidy?

-The above figure shows the market for finish carpenters in Bozeman.If there is a minimum wage set at $18,what is true?

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

The methods that governments use to support farmers vary,but they almost always involve some or all the following methods EXCEPT

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

-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 the figure above,if the wage rate is $6 per hour,then the

-The above figure shows the market for finish carpenters in Bozeman.If there is a minimum wage set at $18,which of the following statements is true?

Both price supports and a price floor can

-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.Which of the following statements is true?

One result of a minimum wage is

-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 ________.

Which of the following describes a difference between a price support and a price ceiling?

Following a major natural disaster that destroys housing,a rent ceiling be an effective policy to increase the quantity of more affordable housing for displaced residents because it would .

The unemployment caused by minimum wage would be larger if

A minimum wage set above the equilibrium wage

Which of the following results from a price ceiling? i.increased search activity ii.surplus iii.black market

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 rent ceiling on housing creates a problem of allocating the available housing units because

Which of the following decrease the deadweight loss from a rent ceiling set below the equilibrium rent? i.lowering the ceiling ii.dedicating more resources to enforcement of the ceiling iii.raising the ceiling

With a price support program,who receives a subsidy?

-The above figure shows the market for finish carpenters in Bozeman.If there is a minimum wage set at $18,what is true?

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

The methods that governments use to support farmers vary,but they almost always involve some or all the following methods EXCEPT

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

-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 the figure above,if the wage rate is $6 per hour,then the

-The above figure shows the market for finish carpenters in Bozeman.If there is a minimum wage set at $18,which of the following statements is true?

Both price supports and a price floor can

-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.Which of the following statements is true?

One result of a minimum wage is

-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 ________.

Which of the following describes a difference between a price support and a price ceiling?

Following a major natural disaster that destroys housing,a rent ceiling ________ be an effective policy to increase the quantity of more affordable housing for displaced residents because it would ________.

The unemployment caused by minimum wage would be larger if

A minimum wage set above the equilibrium wage

Which of the following results from a price ceiling? i.increased search activity ii.surplus iii.black market

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

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

Following a major natural disaster that destroys housing,a rent ceiling be an effective policy to increase the quantity of more affordable housing for displaced residents because it would .