Question 1

If the government imposes an effective ________,output decreases and ________ increases.

Accepted Answer

A)  price support; consumer surplus 
B)  price floor; consumer surplus 
C)  price support; total revenue 
D)  price floor; marginal benefit to consumers 
E)  price ceiling; efficiency 
A)  price support; consumer surplus 
B)  price floor; consumer surplus 
C)  price support; total revenue 
D)  price floor; marginal benefit to consumers 
E)  price ceiling; efficiency

Question 2

When the minimum wage is raised,the ________ union labor ________.

Accepted Answer

A)  demand for; increases 
B)  demand for; decreases 
C)  supply of; increases 
D)  supply of; decreases 
E)  demand for; does not change 
A)  demand for; increases 
B)  demand for; decreases 
C)  supply of; increases 
D)  supply of; decreases 
E)  demand for; does not change

Question 3

-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 4

Discuss the inefficiencies created by a price floor.

Accepted Answer

A price floor prevents the efficient all

Question 5

-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 6

Which of the following is an example of the unfairness of rent control?

Accepted Answer

A)  Voluntary exchange is encouraged by rent control. 
B)  Racial discrimination in renting is discouraged by rent control. 
C)  Newcomers have a more difficult time finding apartments. 
D)  Rich people do not get apartments in these markets. 
E)  Too many people rent apartments. 
A)  Voluntary exchange is encouraged by rent control. 
B)  Racial discrimination in renting is discouraged by rent control. 
C)  Newcomers have a more difficult time finding apartments. 
D)  Rich people do not get apartments in these markets. 
E)  Too many people rent apartments.

Question 7

When a rent ceiling law is passed in a city,which of the following occurs?

Accepted Answer

A)  The total price of renting an apartment decreases to all renters. 
B)  The quantity of apartments supplied does not change. 
C)  Some landlords and renters use methods such as "key money" to get around the rent ceiling law. 
D)  Renters have no trouble finding a nice, reasonably priced apartment to rent. 
E)  Generally the number of renters in the city increases because people move to the city to take advantage of the low-rent apartments. 
A)  The total price of renting an apartment decreases to all renters. 
B)  The quantity of apartments supplied does not change. 
C)  Some landlords and renters use methods such as "key money" to get around the rent ceiling law. 
D)  Renters have no trouble finding a nice, reasonably priced apartment to rent. 
E)  Generally the number of renters in the city increases because people move to the city to take advantage of the low-rent apartments.

Question 8

Compare and contrast a price ceiling and a price floor.

Accepted Answer

A price ceiling is the maximum legal pri

Question 9

Rent controls

Accepted Answer

A)  create a deadweight loss. 
B)  increase maintenance by landlords. 
C)  benefit people who live in rent controlled apartments. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A)  create a deadweight loss. 
B)  increase maintenance by landlords. 
C)  benefit people who live in rent controlled apartments. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 10

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

Accepted Answer

A)  does not apply to all workers. 
B)  boosts the income of highly skilled workers. 
C)  benefits only those workers who are able to find and keep a job. 
D)  benefits nobody. 
E)  cannot be enforced. 
A)  does not apply to all workers. 
B)  boosts the income of highly skilled workers. 
C)  benefits only those workers who are able to find and keep a job. 
D)  benefits nobody. 
E)  cannot be enforced.

Question 11

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 12

Suppose the equilibrium rent in Boston is $1,500.A rent ceiling of $1,600 per month leads to

Accepted Answer

A)  a surplus of apartments in Boston. 
B)  a shortage of apartments in Boston. 
C)  no change in the Boston apartment market. 
D)  fair prices in the Boston apartment 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 Boston. 
B)  a shortage of apartments in Boston. 
C)  no change in the Boston apartment market. 
D)  fair prices in the Boston apartment 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 13

-The figure above illustrates the current market for apartments in Washington,D.C.
a.If the local government imposes a price ceiling of $1,500 per month,is there a shortage? If so,how much,if not,why not?
b.If the local government imposes a price ceiling of $900 per month,is there a shortage? If so,how much,if not,why not?

Accepted Answer

a.There is not a shortage.The equilibriu

Question 14

Price supports are generally used in

Accepted Answer

A)  labor markets. 
B)  industrial markets. 
C)  housing markets. 
D)  markets for services. 
E)  agricultural markets. 
A)  labor markets. 
B)  industrial markets. 
C)  housing markets. 
D)  markets for services. 
E)  agricultural markets.

Question 15

If a rent ceiling is imposed that is less than the equilibrium rent,which of the following outcomes is most likely to occur?

Accepted Answer

A)  reduced search activity 
B)  black market activity 
C)  a building boom 
D)  a housing surplus 
E)  None of the above answers is correct because to have an impact, the rent ceiling must be above the equilibrium rent. 
A)  reduced search activity 
B)  black market activity 
C)  a building boom 
D)  a housing surplus 
E)  None of the above answers is correct because to have an impact, the rent ceiling must be above the equilibrium rent.

Question 16

In the housing market,if a rent ceiling of $600.00 is imposed when the equilibrium rent is $500.00,why will nothing change?

Accepted Answer

A rent ceiling is the maximum legal rent

Question 17

Rent ceilings are difficult to abolish because

Accepted Answer

A)  they create such large profits for landlords. 
B)  current renters offer political support for ceilings. 
C)  the government doesn't like to give up the tax revenues associated with ceilings. 
D)  they result in an efficient use of resources. 
E)  landlords lobby to keep them in place. 
A)  they create such large profits for landlords. 
B)  current renters offer political support for ceilings. 
C)  the government doesn't like to give up the tax revenues associated with ceilings. 
D)  they result in an efficient use of resources. 
E)  landlords lobby to keep them in place.

Question 18

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour.
-In the figure above,the number of unemployed workers is

Accepted Answer

A)  4,000. 
B)  3,000. 
C)  2,000. 
D)  5,000. 
E)  zero. 
A)  4,000. 
B)  3,000. 
C)  2,000. 
D)  5,000. 
E)  zero.

Question 19

-The above figure shows a labor market with minimum wage equal to $16.In this figure,what area equals the deadweight loss?

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 20

Labor unions ________ increases in the minimum wage because an increase in the minimum wage ________ the demand for union labor.

Accepted Answer

A)  support; increases 
B)  support; decreases 
C)  oppose; increases 
D)  oppose; decreases 
E)  support; has no effect on 
A)  support; increases 
B)  support; decreases 
C)  oppose; increases 
D)  oppose; decreases 
E)  support; has no effect on

If the government imposes an effective ,output decreases and increases.

When the minimum wage is raised,the union labor .

-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?

Discuss the inefficiencies created by a price floor.

-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?

Which of the following is an example of the unfairness of rent control?

When a rent ceiling law is passed in a city,which of the following occurs?

Compare and contrast a price ceiling and a price floor.

Rent controls

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

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?

Suppose the equilibrium rent in Boston is $1,500.A rent ceiling of $1,600 per month leads to

Price supports are generally used in

If a rent ceiling is imposed that is less than the equilibrium rent,which of the following outcomes is most likely to occur?

In the housing market,if a rent ceiling of $600.00 is imposed when the equilibrium rent is $500.00,why will nothing change?

Rent ceilings are difficult to abolish because

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -In the figure above,the number of unemployed workers is

-The above figure shows a labor market with minimum wage equal to $16.In this figure,what area equals the deadweight loss?

Labor unions increases in the minimum wage because an increase in the minimum wage the demand for union labor.

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

If the government imposes an effective ________,output decreases and ________ increases.

When the minimum wage is raised,the ________ union labor ________.

-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?

Discuss the inefficiencies created by a price floor.

-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?

Which of the following is an example of the unfairness of rent control?

When a rent ceiling law is passed in a city,which of the following occurs?

Compare and contrast a price ceiling and a price floor.

Rent controls

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

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?

Suppose the equilibrium rent in Boston is $1,500.A rent ceiling of $1,600 per month leads to

Price supports are generally used in

If a rent ceiling is imposed that is less than the equilibrium rent,which of the following outcomes is most likely to occur?

In the housing market,if a rent ceiling of $600.00 is imposed when the equilibrium rent is $500.00,why will nothing change?

Rent ceilings are difficult to abolish because

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -In the figure above,the number of unemployed workers is

-The above figure shows a labor market with minimum wage equal to $16.In this figure,what area equals the deadweight loss?

Labor unions ________ increases in the minimum wage because an increase in the minimum wage ________ the demand for union labor.

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

If the government imposes an effective ,output decreases and increases.

When the minimum wage is raised,the union labor .

Labor unions increases in the minimum wage because an increase in the minimum wage the demand for union labor.