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

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect and taking account of the resources lost in search, consumer surplus equals ________.

Accepted Answer

A) $900,000 
B) $400,000 
C) $200,000 
D) $180,000 
E) $100,000 
A) $900,000 
B) $400,000 
C) $200,000 
D) $180,000 
E) $100,000

Question 3

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 4

People who benefit from a rent ceiling include

Accepted Answer

A) all landlords. 
B) taxpayers. 
C) tenants who have a rent-controlled apartment. 
D) potential tenants, that is, people looking for apartments. 
E) all landlords and some tenants. 
A) all landlords. 
B) taxpayers. 
C) tenants who have a rent-controlled apartment. 
D) potential tenants, that is, people looking for apartments. 
E) all landlords and some tenants.

Question 5

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect, producer surplus equals ________.

Accepted Answer

A) $900,000 
B) $400,000 
C) $200,000 
D) $100,000 
E) $1,800,000 
A) $900,000 
B) $400,000 
C) $200,000 
D) $100,000 
E) $1,800,000

Question 6

-The graph shows the labor market for painters.The lower the wage rate, the ________ is the quantity of painters that firms demand and the ________ is the quantity of painters that households are willing to supply.

Accepted Answer

A) greater; smaller 
B) greater; greater 
C) smaller; greater 
D) smaller; smaller 
E) None of the above answers is correct because both the demand and supply curves will shift in response to the change in the wage rate. 
A) greater; smaller 
B) greater; greater 
C) smaller; greater 
D) smaller; smaller 
E) None of the above answers is correct because both the demand and supply curves will shift in response to the change in the wage rate.

Question 7

In order to have an impact, a ________ must be set below the equilibrium price and when this occurs, ________.

Accepted Answer

A) price ceiling; consumer surplus increases 
B) price floor; consumer surplus decreases 
C) price ceiling; producer surplus decreases 
D) price support; total revenue increases 
E) price support; consumer surplus increases 
A) price ceiling; consumer surplus increases 
B) price floor; consumer surplus decreases 
C) price ceiling; producer surplus decreases 
D) price support; total revenue increases 
E) price support; consumer surplus increases

Question 8

Agricultural price supports in the United States

Accepted Answer

A) harm U.S. consumers, U.S. taxpayers, and foreign farmers and creates a deadweight loss. 
B) benefit U.S. taxpayers, U.S. farmers, and U.S. consumers. 
C) create gains to U.S. farmers that are at least as large as losses to U.S. consumers. 
D) decrease the deadweight loss and improve market efficiency. 
E) None of the above answers is correct. 
A) harm U.S. consumers, U.S. taxpayers, and foreign farmers and creates a deadweight loss. 
B) benefit U.S. taxpayers, U.S. farmers, and U.S. consumers. 
C) create gains to U.S. farmers that are at least as large as losses to U.S. consumers. 
D) decrease the deadweight loss and improve market efficiency. 
E) None of the above answers is correct.

Question 9

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) not change; not change 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) not change; not change

Question 10

The deadweight loss in a housing market with a rent ceiling set below the equilibrium rent is the

Accepted Answer

A) loss to those who cannot find apartments and the gain to landlords who charge black market rents. 
B) loss to those who cannot find apartments and the loss to landlords who cannot offer housing at the lower rent ceiling. 
C) loss to landlords and the gain to tenants who pay a fairer rent. 
D) loss to tenants and the gain to landlords who have the incentive to offer more apartments for rent. 
E) gain to landlords and to tenants because now a fairer rent is charged. 
A) loss to those who cannot find apartments and the gain to landlords who charge black market rents. 
B) loss to those who cannot find apartments and the loss to landlords who cannot offer housing at the lower rent ceiling. 
C) loss to landlords and the gain to tenants who pay a fairer rent. 
D) loss to tenants and the gain to landlords who have the incentive to offer more apartments for rent. 
E) gain to landlords and to tenants because now a fairer rent is charged.

Question 11

Compare and contrast a price ceiling and a price floor.

Accepted Answer

A price ceiling is the maximum legal pri

Question 12

-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 13

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

Accepted Answer

A) Little Rock and St. Louis. 
B) only Raleigh. 
C) Little Rock, St. Louis, and Raleigh. 
D) only Little Rock. 
E) St. Louis and Raleigh. 
A) Little Rock and St. Louis. 
B) only Raleigh. 
C) Little Rock, St. Louis, and Raleigh. 
D) only Little Rock. 
E) St. Louis and Raleigh.

Question 14

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 15

-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 16

-The figure above illustrates the bagel market.Which of the following statements is correct?

Accepted Answer

A) With a price ceiling of $1.00 per bagel, the price of a bagel is $1. 
B) With a price ceiling of $3.00 per bagel, the price of a bagel is $2. 
C) With no government intervention, the equilibrium price of a bagel is $2. 
D)  Only answers A and B are correct. 
E) Answers A, B, and C are correct. 
A) With a price ceiling of $1.00 per bagel, the price of a bagel is $1. 
B) With a price ceiling of $3.00 per bagel, the price of a bagel is $2. 
C) With no government intervention, the equilibrium price of a bagel is $2. 
D)  Only answers A and B are correct. 
E) Answers A, B, and C are correct.

Question 17

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus ________ and the workers' surplus ________.

Accepted Answer

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

Question 18

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 19

-The figure above shows that the lowest wage rate for which someone is willing to work is

Accepted Answer

A) $3 an hour. 
B) $5 an hour. 
C) $6 an hour. 
D) $7 an hour. 
E) $4 an hour. 
A) $3 an hour. 
B) $5 an hour. 
C) $6 an hour. 
D) $7 an hour. 
E) $4 an hour.

Question 20

Who are minimum wages designed to help? Do they succeed? What is their effect on society?

Accepted Answer

Minimum wages are designed to improve th

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

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect and taking account of the resources lost in search, consumer surplus equals ________.

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

People who benefit from a rent ceiling include

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect, producer surplus equals ________.

-The graph shows the labor market for painters.The lower the wage rate, the is the quantity of painters that firms demand and the is the quantity of painters that households are willing to supply.

In order to have an impact, a must be set below the equilibrium price and when this occurs, .

Agricultural price supports in the United States

A minimum wage set above the equilibrium wage will the quantity of labor demanded and the quantity of labor supplied.

The deadweight loss in a housing market with a rent ceiling set below the equilibrium rent is the

Compare and contrast a price ceiling and a price floor.

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

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

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

-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 illustrates the bagel market.Which of the following statements is correct?

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus and the workers' surplus .

With a price support program, who receives a subsidy?

-The figure above shows that the lowest wage rate for which someone is willing to work is

Who are minimum wages designed to help? Do they succeed? What is their effect on society?

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.

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect and taking account of the resources lost in search, consumer surplus equals ________.

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

People who benefit from a rent ceiling include

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect, producer surplus equals ________.

-The graph shows the labor market for painters.The lower the wage rate, the ________ is the quantity of painters that firms demand and the ________ is the quantity of painters that households are willing to supply.

In order to have an impact, a ________ must be set below the equilibrium price and when this occurs, ________.

Agricultural price supports in the United States

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

The deadweight loss in a housing market with a rent ceiling set below the equilibrium rent is the

Compare and contrast a price ceiling and a price floor.

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

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

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

-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 illustrates the bagel market.Which of the following statements is correct?

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus ________ and the workers' surplus ________.

With a price support program, who receives a subsidy?

-The figure above shows that the lowest wage rate for which someone is willing to work is

Who are minimum wages designed to help? Do they succeed? What is their effect on society?

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.

-The graph shows the labor market for painters.The lower the wage rate, the is the quantity of painters that firms demand and the is the quantity of painters that households are willing to supply.

In order to have an impact, a must be set below the equilibrium price and when this occurs, .

A minimum wage set above the equilibrium wage will the quantity of labor demanded and the quantity of labor supplied.

-In the figure above, with the rent ceiling units of housing are available, and black market rents might be as high as a month.

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus and the workers' surplus .