Question 1

The shortage created by a price ceiling will likely be

Accepted Answer

A)  smaller if the good is a necessity. 
B)  larger if the good is addictive. 
C)  smaller if the good is a luxury. 
D)  unaffected by the time that has elapsed since the price ceiling is implemented. 
E)  None of the above answers is correct. 
A)  smaller if the good is a necessity. 
B)  larger if the good is addictive. 
C)  smaller if the good is a luxury. 
D)  unaffected by the time that has elapsed since the price ceiling is implemented. 
E)  None of the above answers is correct.

Question 2

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point ________ and point ________.

Accepted Answer

A)  a; d 
B)  a; b 
C)  b; c 
D)  a; c 
E)  c; d 
A)  a; d 
B)  a; b 
C)  b; c 
D)  a; c 
E)  c; d

Question 3

In a housing market with a rent ceiling set below the equilibrium rent,

Accepted Answer

A)  some people seeking an apartment to rent will not be able to find one. 
B)  the total cost of renting an apartment will decrease for all those seeking housing. 
C)  some landlords will not be able to find renters to fill available apartments. 
D)  search will decrease because renters no longer need to search for less expensive apartments. 
E)  None of the above answers are correct because to have an impact, the rent ceiling must be set above the equilibrium rent. 
A)  some people seeking an apartment to rent will not be able to find one. 
B)  the total cost of renting an apartment will decrease for all those seeking housing. 
C)  some landlords will not be able to find renters to fill available apartments. 
D)  search will decrease because renters no longer need to search for less expensive apartments. 
E)  None of the above answers are correct because to have an impact, the rent ceiling must be set above the equilibrium rent.

Question 4

A price ceiling in the market for gasoline that is below the equilibrium price will lead to

Accepted Answer

A)  the quantity demanded of gasoline exceeding the quantity supplied. 
B)  an increase in the demand for gasoline. 
C)  a decrease in the supply of gasoline. 
D)  the quantity supplied of gasoline exceeding the quantity demanded. 
E)  no change in the market since the price ceiling is below the equilibrium price. 
A)  the quantity demanded of gasoline exceeding the quantity supplied. 
B)  an increase in the demand for gasoline. 
C)  a decrease in the supply of gasoline. 
D)  the quantity supplied of gasoline exceeding the quantity demanded. 
E)  no change in the market since the price ceiling is below the equilibrium price.

Question 5

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 6

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month.
-In the figure above,with the rent ceiling ________ units of housing are available,and black market rents might be as high as ________ a month.

Accepted Answer

A)  3,000; $625 
B)  6,000; $400 
C)  3,000; $550 
D)  4,000; $550 
E)  4,000; $625 
A)  3,000; $625 
B)  6,000; $400 
C)  3,000; $550 
D)  4,000; $550 
E)  4,000; $625

Question 7

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to 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 8

A price ceiling is

Accepted Answer

A)  a maximum legal price. 
B)  a minimum legal price. 
C)  an equilibrium price. 
D)  a market-determined price. 
E)  the highest price at which the quantity demanded equals the quantity supplied. 
A)  a maximum legal price. 
B)  a minimum legal price. 
C)  an equilibrium price. 
D)  a market-determined price. 
E)  the highest price at which the quantity demanded equals the quantity supplied.

Question 9

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

Accepted Answer

A)  the quantity supplied of milk exceeds the quantity demanded. 
B)  the quantity supplied of milk falls short of the quantity demanded. 
C)  the supply increases. 
D)  the market will not be affected. 
E)  there will be a shortage of milk. 
A)  the quantity supplied of milk exceeds the quantity demanded. 
B)  the quantity supplied of milk falls short of the quantity demanded. 
C)  the supply increases. 
D)  the market will not be affected. 
E)  there will be a shortage of milk.

Question 10

A market with a price support set above the equilibrium price,

Accepted Answer

A)  consumers gain. 
B)  taxes on consumers decrease. 
C)  marginal benefit exceeds marginal cost. 
D)  is efficient. 
E)  farmers gain. 
A)  consumers gain. 
B)  taxes on consumers decrease. 
C)  marginal benefit exceeds marginal cost. 
D)  is efficient. 
E)  farmers gain.

Question 11

-The figure above shows the labor market in a region.If a minimum wage of $8 an hour is imposed,then the quantity of labor supplied is ________ and the quantity of labor demanded is ________.

Accepted Answer

A)  60,000; 60,000 
B)  80,000; 40,000 
C)  40,000; 60,000 
D)  60,000; 40,000 
E)  40,000; 40,000 
A)  60,000; 60,000 
B)  80,000; 40,000 
C)  40,000; 60,000 
D)  60,000; 40,000 
E)  40,000; 40,000

Question 12

Why do some workers lose their job when the minimum wage is increased?

Accepted Answer

A)  The increase in labor costs decreases the supply of the product, thereby raising the price of the good so that the equilibrium quantity decreases to zero. 
B)  The increase in the minimum wage decreases the quantity of labor demanded. 
C)  The demand for labor is perfectly inelastic. 
D)  The supply of labor decreases. 
E)  The demand for labor is perfectly elastic. 
A)  The increase in labor costs decreases the supply of the product, thereby raising the price of the good so that the equilibrium quantity decreases to zero. 
B)  The increase in the minimum wage decreases the quantity of labor demanded. 
C)  The demand for labor is perfectly inelastic. 
D)  The supply of labor decreases. 
E)  The demand for labor is perfectly elastic.

Question 13

-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.When the price ceiling is in place and taking account of the resources lost in search,consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed.

Accepted Answer

A)  decreases; increases 
B)  decreases; decreases 
C)  increases; increases 
D)  increases; decreases 
E)  does not change; increases 
A)  decreases; increases 
B)  decreases; decreases 
C)  increases; increases 
D)  increases; decreases 
E)  does not change; increases

Question 14

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

Accepted Answer

A)  when the market is at its equilibrium, with no minimum wage 
B)  when a minimum wage of $4 an hour is imposed 
C)  when a minimum wage of $6 an hour is imposed 
D)  when a minimum wage of $8 an hour is imposed 
E)  None of the above because the market will adjust so that there is no unemployment. 
A)  when the market is at its equilibrium, with no minimum wage 
B)  when a minimum wage of $4 an hour is imposed 
C)  when a minimum wage of $6 an hour is imposed 
D)  when a minimum wage of $8 an hour is imposed 
E)  None of the above because the market will adjust so that there is no unemployment.

Question 15

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Accepted Answer

A minimum wage set above the equilibrium

Question 16

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

Accepted Answer

A)  $7 
B)  $15 
C)  $1 
D)  $8 
E)  $0 
A)  $7 
B)  $15 
C)  $1 
D)  $8 
E)  $0

Question 17

Assume a market is producing efficiently.Which type of government intervention in this market might create a deadweight loss?
i.a price ceiling
ii.a price floor
iii.a price support

Accepted Answer

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

Question 18

Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour.A minimum wage law that creates a price floor of $8.50 an hour leads to

Accepted Answer

A)  a surplus of lifeguards in Houston. 
B)  a shortage of lifeguards in Houston. 
C)  no changes in the lifeguard market. 
D)  a change in the quantity of lifeguards supplied but no change in the quantity of lifeguards demanded. 
E)  an increase in the number of lifeguards employed. 
A)  a surplus of lifeguards in Houston. 
B)  a shortage of lifeguards in Houston. 
C)  no changes in the lifeguard market. 
D)  a change in the quantity of lifeguards supplied but no change in the quantity of lifeguards demanded. 
E)  an increase in the number of lifeguards employed.

Question 19

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

Accepted Answer

A)  a surplus of 300 workers occurs. 
B)  there is no shortage or surplus of workers. 
C)  900 workers are employed. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  a surplus of 300 workers occurs. 
B)  there is no shortage or surplus of workers. 
C)  900 workers are employed. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 20

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

Accepted Answer

A)  quantity of the surplus crop multiplied by the support price. 
B)  quantity of the crop produced multiplied by the support price. 
C)  quantity of the crop purchased by domestic users multiplied by the support price. 
D)  quantity of the surplus crop multiplied by the equilibrium price. 
E)  quantity of the crop purchased by domestic users multiplied by the equilibrium price. 
A)  quantity of the surplus crop multiplied by the support price. 
B)  quantity of the crop produced multiplied by the support price. 
C)  quantity of the crop purchased by domestic users multiplied by the support price. 
D)  quantity of the surplus crop multiplied by the equilibrium price. 
E)  quantity of the crop purchased by domestic users multiplied by the equilibrium price.

The shortage created by a price ceiling will likely be

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point and point .

In a housing market with a rent ceiling set below the equilibrium rent,

A price ceiling in the market for gasoline that is below the equilibrium price will lead to

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

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -In the figure above,with the rent ceiling units of housing are available,and black market rents might be as high as a month.

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

A price ceiling is

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

A market with a price support set above the equilibrium price,

-The figure above shows the labor market in a region.If a minimum wage of $8 an hour is imposed,then the quantity of labor supplied is and the quantity of labor demanded is .

Why do some workers lose their job when the minimum wage is increased?

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

Assume a market is producing efficiently.Which type of government intervention in this market might create a deadweight loss? i.a price ceiling ii.a price floor iii.a price support

Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour.A minimum wage law that creates a price floor of $8.50 an hour leads to

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

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

The shortage created by a price ceiling will likely be

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point ________ and point ________.

In a housing market with a rent ceiling set below the equilibrium rent,

A price ceiling in the market for gasoline that is below the equilibrium price will lead to

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

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -In the figure above,with the rent ceiling ________ units of housing are available,and black market rents might be as high as ________ a month.

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

A price ceiling is

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

A market with a price support set above the equilibrium price,

-The figure above shows the labor market in a region.If a minimum wage of $8 an hour is imposed,then the quantity of labor supplied is ________ and the quantity of labor demanded is ________.

Why do some workers lose their job when the minimum wage is increased?

-The figure above shows the labor market in a region.In which of the following cases would the amount of unemployment be the largest?

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

Assume a market is producing efficiently.Which type of government intervention in this market might create a deadweight loss? i.a price ceiling ii.a price floor iii.a price support

Suppose the current equilibrium wage rate for lifeguards in Houston is $7.85 an hour.A minimum wage law that creates a price floor of $8.50 an hour leads to

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

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 above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point and point .

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -In the figure above,with the rent ceiling units of housing are available,and black market rents might be as high as a month.

-The figure above shows the labor market in a region.If a minimum wage of $8 an hour is imposed,then the quantity of labor supplied is and the quantity of labor demanded is .