Question 1

-In the figure above, the deadweight loss is

Accepted Answer

A) $4,000 an hour. 
B) $2,000 an hour. 
C) $1,000 an hour. 
D) $5,000 an hour. 
E) zero. 
A) $4,000 an hour. 
B) $2,000 an hour. 
C) $1,000 an hour. 
D) $5,000 an hour. 
E) zero.

Question 2

-As shown in the figure above, the rent ceiling

Accepted Answer

A) decreases consumer surplus. 
B) increases producer surplus. 
C) decreases deadweight loss. 
D) increases the quantity of housing rented. 
E) is efficient. 
A) decreases consumer surplus. 
B) increases producer surplus. 
C) decreases deadweight loss. 
D) increases the quantity of housing rented. 
E) is efficient.

Question 3

-The above figure shows a labor market with a minimum wage of $8 an hour.How many people are employed when the minimum wage is in place?

Accepted Answer

A) 40,000 
B) 60,000 
C) 80,000 
D) fewer than 40,000 
E) more than 80,000 
A) 40,000 
B) 60,000 
C) 80,000 
D) fewer than 40,000 
E) more than 80,000

Question 4

One result of the minimum wage is

Accepted Answer

A) a black market for labor that pays more than the minimum wage. 
B) a black market for labor that pays less than the minimum wage. 
C) decreased job search activity. 
D) a decrease in unemployment among poor and unskilled workers. 
E) an increase in employment among poor and unskilled workers. 
A) a black market for labor that pays more than the minimum wage. 
B) a black market for labor that pays less than the minimum wage. 
C) decreased job search activity. 
D) a decrease in unemployment among poor and unskilled workers. 
E) an increase in employment among poor and unskilled workers.

Question 5

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 6

-The graph shows the market for ski chalets in Aspen.If a rent ceiling is set at $1,900 a week, then the maximum amount charged in the black market is ________ a week.

Accepted Answer

A) $1,900 
B) $2,050 
C) $2,125 
D) $225 
E) $150 
A) $1,900 
B) $2,050 
C) $2,125 
D) $225 
E) $150

Question 7

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 8

An increase in the minimum wage to $15 per hour would lead to

Accepted Answer

A) an increase in search activity for many workers. 
B) a decrease in search activity for many workers. 
C) a decrease in unemployment. 
D) no change in unemployment. 
E) no change in employment. 
A) an increase in search activity for many workers. 
B) a decrease in search activity for many workers. 
C) a decrease in unemployment. 
D) no change in unemployment. 
E) no change in employment.

Question 9

Suppose the government imposes a price support that is above the equilibrium price.As a result,

Accepted Answer

A) total revenue increases. 
B) consumer surplus increases. 
C) the marginal cost of the last unit produced decreases. 
D) the government has effectively imposed a price ceiling. 
E) the subsidy the government pays decreases. 
A) total revenue increases. 
B) consumer surplus increases. 
C) the marginal cost of the last unit produced decreases. 
D) the government has effectively imposed a price ceiling. 
E) the subsidy the government pays decreases.

Question 10

A price floor set above the equilibrium price

Accepted Answer

A) creates a surplus. 
B) creates a shortage. 
C) creates excess demand. 
D) balances supply and demand. 
E) has no effect. 
A) creates a surplus. 
B) creates a shortage. 
C) creates excess demand. 
D) balances supply and demand. 
E) has no effect.

Question 11

A price floor is a price

Accepted Answer

A) below which a seller cannot legally sell. 
B) above which a seller cannot legally sell. 
C) that creates a shortage of the good if it is set above the equilibrium price. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) below which a seller cannot legally sell. 
B) above which a seller cannot legally sell. 
C) that creates a shortage of the good if it is set above the equilibrium price. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 12

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 13

The people who immediately benefit from a minimum wage are

Accepted Answer

A) employers who now pay the minimum wage. 
B) those people who enter the labor force to search for minimum wage jobs. 
C) the workers who retain their jobs after enactment of the minimum wage. 
D) everyone, both demanders and suppliers, because the minimum wage benefits everyone. 
E) all workers. 
A) employers who now pay the minimum wage. 
B) those people who enter the labor force to search for minimum wage jobs. 
C) the workers who retain their jobs after enactment of the minimum wage. 
D) everyone, both demanders and suppliers, because the minimum wage benefits everyone. 
E) all workers.

Question 14

If a price ceiling is set above the equilibrium price, then

Accepted Answer

A) there will be a surplus of the good. 
B) there will be a shortage of the good. 
C) there will be neither a shortage nor a surplus of the good. 
D) the price ceiling will generate revenue for the government. 
E) the price ceiling affects suppliers but not demanders. 
A) there will be a surplus of the good. 
B) there will be a shortage of the good. 
C) there will be neither a shortage nor a surplus of the good. 
D) the price ceiling will generate revenue for the government. 
E) the price ceiling affects suppliers but not demanders.

Question 15

Explain why in cities such as New York City that have rent ceiling laws, so many people who work in the city commute from outside the city.

Accepted Answer

Rent ceilings decrease the quantity supp

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 demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

Accepted Answer

A) a surplus of 20 slices of pizza. 
B) a shortage of 20 slices of pizza. 
C) a shortage of 40 slices of pizza. 
D) a shortage of 60 slices of pizza. 
E) neither a shortage nor a surplus. 
A) a surplus of 20 slices of pizza. 
B) a shortage of 20 slices of pizza. 
C) a shortage of 40 slices of pizza. 
D) a shortage of 60 slices of pizza. 
E) neither a shortage nor a surplus.

Question 18

-The graph shows the labor market for teenagers in Atlanta.If the government sets a minimum wage of $6 an hour, then the maximum amount that a teenager would be willing to spend on job search is ________ an hour.

Accepted Answer

A) $2 
B) $4 
C) $5 
D) $6 
E) $3 
A) $2 
B) $4 
C) $5 
D) $6 
E) $3

Question 19

-The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

Accepted Answer

A) Yes 
B) No 
C) Only if the supply of labor is perfectly inelastic 
D) Only if the supply of labor is perfectly elastic 
E) Only if employment exceeds the efficient amount 
A) Yes 
B) No 
C) Only if the supply of labor is perfectly inelastic 
D) Only if the supply of labor is perfectly elastic 
E) Only if employment exceeds the efficient amount

Question 20

In the 1980s, one of the most common sights in the socialist countries, such as the former Soviet Union and North Korea, were long lines for bread, sugar, and other necessities.These countries had price ceilings on these necessities.Some of the socialist nations, such as the former Soviet Union, have moved to a market economy by lifting the price ceilings, while others, such as North Korea, have retained their price ceilings.What prediction do you make about the presence (or absence)of long lines today in the former Soviet Union and North Korea? Explain your answer.

Accepted Answer

The long lines have disappeared in the f

-In the figure above, the deadweight loss is

-As shown in the figure above, the rent ceiling

-The above figure shows a labor market with a minimum wage of $8 an hour.How many people are employed when the minimum wage is in place?

One result of the minimum wage is

Rent controls

-The graph shows the market for ski chalets in Aspen.If a rent ceiling is set at $1,900 a week, then the maximum amount charged in the black market is ________ a week.

Rent ceilings are difficult to abolish because

An increase in the minimum wage to $15 per hour would lead to

Suppose the government imposes a price support that is above the equilibrium price.As a result,

A price floor set above the equilibrium price

A price floor is a price

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

The people who immediately benefit from a minimum wage are

If a price ceiling is set above the equilibrium price, then

Explain why in cities such as New York City that have rent ceiling laws, so many people who work in the city commute from outside the city.

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 demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

-The graph shows the labor market for teenagers in Atlanta.If the government sets a minimum wage of $6 an hour, then the maximum amount that a teenager would be willing to spend on job search is ________ an hour.

-The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

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

-In the figure above, the deadweight loss is

-As shown in the figure above, the rent ceiling

-The above figure shows a labor market with a minimum wage of $8 an hour.How many people are employed when the minimum wage is in place?

One result of the minimum wage is

Rent controls

-The graph shows the market for ski chalets in Aspen.If a rent ceiling is set at $1,900 a week, then the maximum amount charged in the black market is ________ a week.

Rent ceilings are difficult to abolish because

An increase in the minimum wage to $15 per hour would lead to

Suppose the government imposes a price support that is above the equilibrium price.As a result,

A price floor set above the equilibrium price

A price floor is a price

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

The people who immediately benefit from a minimum wage are

If a price ceiling is set above the equilibrium price, then

Explain why in cities such as New York City that have rent ceiling laws, so many people who work in the city commute from outside the city.

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 demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

-The graph shows the labor market for teenagers in Atlanta.If the government sets a minimum wage of $6 an hour, then the maximum amount that a teenager would be willing to spend on job search is ________ an hour.

-The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

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

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 .