Question 1

Economists are reluctant to state that price controls are desirable or undesirable because

Accepted Answer

A) it is impossible to evaluate the impact on quantity demanded and quantity supplied as a result of price controls. 
B) whether the gains from the winners exceed the losses from the losers is not strictly an economic question. 
C) sometimes price controls result in increases in economic efficiency and sometimes they result in decreases in economic efficiency. 
D) economists are reluctant to conduct positive analysis of price controls. 
A) it is impossible to evaluate the impact on quantity demanded and quantity supplied as a result of price controls. 
B) whether the gains from the winners exceed the losses from the losers is not strictly an economic question. 
C) sometimes price controls result in increases in economic efficiency and sometimes they result in decreases in economic efficiency. 
D) economists are reluctant to conduct positive analysis of price controls.

Question 2

Rent control is an example of

Accepted Answer

A) a subsidy for low-skilled workers. 
B) a price floor. 
C) a price ceiling. 
D) a black market. 
A) a subsidy for low-skilled workers. 
B) a price floor. 
C) a price ceiling. 
D) a black market.

Question 3

Figure 4.5
   
Figure 4.5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4.5.What is the value of the deadweight loss after the imposition of the ceiling?

Accepted Answer

A) $50,000 
B) $125,000 
C) $175,000 
D) $260,000 
A) $50,000 
B) $125,000 
C) $175,000 
D) $260,000

Question 4

Paul goes to SportChek to buy a new tennis racquet.He is willing to pay $200 for a new racquet, but buys one on sale for $125.Paul's consumer surplus from the purchase is

Accepted Answer

A) $325 
B) $200 
C) $125 
D) $75 
A) $325 
B) $200 
C) $125 
D) $75

Question 5

If equilibrium is achieved in a competitive market

Accepted Answer

A) there is no deadweight loss. 
B) the deadweight loss will be maximized. 
C) the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D) the deadweight loss will be the same as the opportunity cost of the last unit of output sold. 
A) there is no deadweight loss. 
B) the deadweight loss will be maximized. 
C) the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D) the deadweight loss will be the same as the opportunity cost of the last unit of output sold.

Question 6

Willingness to pay measures

Accepted Answer

A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. 
B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. 
C) the maximum price that a buyer is willing to pay for a good. 
D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept. 
A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. 
B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. 
C) the maximum price that a buyer is willing to pay for a good. 
D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.

Question 7

Figure 4.8
   
Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market.
-Refer to Figure 4.8.What is the size of the unit tax?

Accepted Answer

A) $2 
B) $5 
C) $7 
D) $12 
A) $2 
B) $5 
C) $7 
D) $12

Question 8

One of the stated purposes of price floors in the milk and poultry markets is

Accepted Answer

A) to help prevent obesity. 
B) to support smaller grocery stores from unfair competition from chain stores. 
C) to raise revenue for the government. 
D) to ensure that farmers receive a fair price for their products. 
A) to help prevent obesity. 
B) to support smaller grocery stores from unfair competition from chain stores. 
C) to raise revenue for the government. 
D) to ensure that farmers receive a fair price for their products.

Question 9

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Accepted Answer

A) True 
 B)False

Question 10

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Accepted Answer

A) demand 
B) supply 
C) production possibilities 
D) marginal cost 
A) demand 
B) supply 
C) production possibilities 
D) marginal cost

Question 11

Figure 4.5
   
Figure 4.5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4.5.With rent control, the quantity supplied is 200 apartments.Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get.What is the highest rent they can get per month?

Accepted Answer

A) $1,000 
B) $1,500 
C) $2,000 
D) $2,300 
A) $1,000 
B) $1,500 
C) $2,000 
D) $2,300

Question 12

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

Accepted Answer

A) True 
 B)False

Question 13

In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

Accepted Answer

A) utility; average cost 
B) marginal benefit; marginal cost 
C) economic surplus; opportunity cost 
D) net benefit; net cost 
A) utility; average cost 
B) marginal benefit; marginal cost 
C) economic surplus; opportunity cost 
D) net benefit; net cost

Question 14

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

Accepted Answer

A) producer surplus. 
B) the substitution effect. 
C) the income effect. 
D) consumer surplus. 
A) producer surplus. 
B) the substitution effect. 
C) the income effect. 
D) consumer surplus.

Question 15

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4.8
   
Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market.
-Refer to Figure 4.8.The price buyers pay after the tax is

Accepted Answer

A) $7. 
B) $20. 
C) $22. 
D) $27. 
A) $7. 
B) $20. 
C) $22. 
D) $27.

Question 17

Which of the following is not a consequence of minimum wage laws?

Accepted Answer

A) Low skilled workers are hurt because minimum wage reduces the number of jobs providing low skilled workers with training. 
B) Employers will be reluctant to offer low-skill workers jobs with training. 
C) Producers have an incentive to offer workers non-wage benefits such as extra health and dental care benefits and convenient working hours rather than a higher wage. 
D) Some workers benefit when the minimum wage is increased. 
A) Low skilled workers are hurt because minimum wage reduces the number of jobs providing low skilled workers with training. 
B) Employers will be reluctant to offer low-skill workers jobs with training. 
C) Producers have an incentive to offer workers non-wage benefits such as extra health and dental care benefits and convenient working hours rather than a higher wage. 
D) Some workers benefit when the minimum wage is increased.

Question 18

Figure 4.3
   
Figure 4.3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 4.3.What is the value of the deadweight loss at a price of $18?

Accepted Answer

A) $100 
B) $180 
C) $660 
D) $1,040 
A) $100 
B) $180 
C) $660 
D) $1,040

Question 19

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

Accepted Answer

A) zero 
B) the area between the supply curve and the demand curve 
C) the area above the supply curve 
D) the area under the demand curve 
A) zero 
B) the area between the supply curve and the demand curve 
C) the area above the supply curve 
D) the area under the demand curve

Question 20

Table 4.3
 $\begin{array}{|c|c|c|}
\hline \begin{array}{c}
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Quantity of } \
\text { Labour } \
\text { Supplied }
\end{array} & \begin{array}{c}
\text { Quantity of } \
\text { Labour } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$ 
Table 4.3 shows the demand and supply schedules for the labour market in the city of Oshawa.
-Refer to Table 4.3.If a minimum wage of $9.50 an hour is mandated, what is the quantity of labour supplied?

Accepted Answer

A) 40,000 
B) 570,000 
C) 610,000 
D) 1,180,000 
A) 40,000 
B) 570,000 
C) 610,000 
D) 1,180,000

Economists are reluctant to state that price controls are desirable or undesirable because

Rent control is an example of

Figure 4.5 Figure 4.5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4.5.What is the value of the deadweight loss after the imposition of the ceiling?

Paul goes to SportChek to buy a new tennis racquet.He is willing to pay $200 for a new racquet, but buys one on sale for $125.Paul's consumer surplus from the purchase is

If equilibrium is achieved in a competitive market

Willingness to pay measures

Figure 4.8 Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4.8.What is the size of the unit tax?

One of the stated purposes of price floors in the milk and poultry markets is

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

In a competitive market the demand curve shows the received by consumers and the supply curve shows the .

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Figure 4.8 Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4.8.The price buyers pay after the tax is

Which of the following is not a consequence of minimum wage laws?

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 4: Economic Efficiency, Government Price Setting, and Taxes

Economists are reluctant to state that price controls are desirable or undesirable because

Rent control is an example of

Figure 4.5 Figure 4.5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4.5.What is the value of the deadweight loss after the imposition of the ceiling?

Paul goes to SportChek to buy a new tennis racquet.He is willing to pay $200 for a new racquet, but buys one on sale for $125.Paul's consumer surplus from the purchase is

If equilibrium is achieved in a competitive market

Willingness to pay measures

Figure 4.8 Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4.8.What is the size of the unit tax?

One of the stated purposes of price floors in the milk and poultry markets is

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Figure 4.8 Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4.8.The price buyers pay after the tax is

Which of the following is not a consequence of minimum wage laws?

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

In a competitive market the demand curve shows the received by consumers and the supply curve shows the .