Question 1

If the government removes a binding price floor from a market,then the price paid by buyers will

Accepted Answer

A)  increase, and the quantity sold in the market will increase. 
B)  increase, and the quantity sold in the market will decrease. 
C)  decrease, and the quantity sold in the market will increase. 
D)  decrease, and the quantity sold in the market will decrease. 
A)  increase, and the quantity sold in the market will increase. 
B)  increase, and the quantity sold in the market will decrease. 
C)  decrease, and the quantity sold in the market will increase. 
D)  decrease, and the quantity sold in the market will decrease.

Question 2

If market demand decreases and market supply increases,then equilibrium quantity will (be)____ and equilibrium price will (be)____.

Accepted Answer

A)  indeterminate; decrease 
B)  indeterminate; increase 
C)  decrease; indeterminate 
D)  increase; indeterminate 
A)  indeterminate; decrease 
B)  indeterminate; increase 
C)  decrease; indeterminate 
D)  increase; indeterminate

Question 3

Which of the following is false?

Accepted Answer

A)  If demand decreases and supply increases, the equilibrium price will rise. 
B)  If supply decreases and demand remains the same, the equilibrium price will rise. 
C)  if supply increases and demand decreases, the equilibrium price will fall. 
D)  if demand increases and supply decreases, the equilibrium price will rise. 
A)  If demand decreases and supply increases, the equilibrium price will rise. 
B)  If supply decreases and demand remains the same, the equilibrium price will rise. 
C)  if supply increases and demand decreases, the equilibrium price will fall. 
D)  if demand increases and supply decreases, the equilibrium price will rise.

Question 4

When both supply and demand shift in the same direction,the change in the equilibrium quantity traded will be in the same direction as the shifting curves.

Accepted Answer

A) True 
 B)False

Question 5

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 5-9   Refer to Exhibit 5-9.The price ceiling shown in panel (a)

Accepted Answer

A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both (a) and (b) are correct. 
A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both (a) and (b) are correct.

Question 7

If the equilibrium price of widgets is $22,and then a price ceiling of $24 is imposed by the government,as a result,

Accepted Answer

A)  there will be no effect on the widget market. 
B)  there will be a shortage of widgets. 
C)  there will be a surplus of widgets. 
D)  the price of widgets will increase. 
A)  there will be no effect on the widget market. 
B)  there will be a shortage of widgets. 
C)  there will be a surplus of widgets. 
D)  the price of widgets will increase.

Question 8

If a price ceiling of $5 per gallon is imposed on gasoline,and the market equilibrium price is $4.50,then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 9

Whenever there is a shortage at a particular price,the quantity sold at that price will equal:

Accepted Answer

A)  the quantity demanded at that price. 
B)  the quantity supplied minus the quantity demanded. 
C)  the quantity supplied at that price. 
D)  (quantity demanded plus quantity supplied)/2. 
A)  the quantity demanded at that price. 
B)  the quantity supplied minus the quantity demanded. 
C)  the quantity supplied at that price. 
D)  (quantity demanded plus quantity supplied)/2.

Question 10

A price floor will be binding only if it is set

Accepted Answer

A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price. 
A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price.

Question 11

Assume that coffee and tea are substitutes for each other.If weather conditions cause a substantial portion of the available coffee crop to be destroyed,then most probably:

Accepted Answer

A)  the price of tea will decrease. 
B)  the price of coffee will decrease. 
C)  the price of tea will increase 
D)  none of the above 
A)  the price of tea will decrease. 
B)  the price of coffee will decrease. 
C)  the price of tea will increase 
D)  none of the above

Question 12

An increase in the price of a close substitute for good A will:

Accepted Answer

A)  increase demand, increase price and increase the quantity exchanged. 
B)  increase demand, increase price and decrease the quantity exchanged. 
C)  increase supply, increase price and increase the quantity exchanged. 
D)  decrease demand, decrease price and decrease the quantity exchanged. 
A)  increase demand, increase price and increase the quantity exchanged. 
B)  increase demand, increase price and decrease the quantity exchanged. 
C)  increase supply, increase price and increase the quantity exchanged. 
D)  decrease demand, decrease price and decrease the quantity exchanged.

Question 13

Whenever a price floor is imposed above equilibrium price,it is true that:

Accepted Answer

A)  supply will increase due to a higher price and a surplus will result. 
B)  supply will increase due to a higher price until it just equals the quantity demanded. 
C)  demand will increase due to a higher price and a shortage will result. 
D)  quantity supplied will exceed the quantity demanded. 
A)  supply will increase due to a higher price and a surplus will result. 
B)  supply will increase due to a higher price until it just equals the quantity demanded. 
C)  demand will increase due to a higher price and a shortage will result. 
D)  quantity supplied will exceed the quantity demanded.

Question 14

In an attempt to reduce poaching of elephant ivory tusks,officials in Kenya burned illegally gathered ivory.Using your understanding of shifts in supply and demand,will this turn out to be a helpful or hurtful move on the Kenyan government's part?

Accepted Answer

The burning of the ivory causes the supp

Question 15

If market demand increases and market supply decreases,then equilibrium quantity will (be)____ and equilibrium price will (be)____.

Accepted Answer

A)  indeterminate; decrease 
B)  indeterminate; increase 
C)  decrease; decrease 
D)  increase; increase 
A)  indeterminate; decrease 
B)  indeterminate; increase 
C)  decrease; decrease 
D)  increase; increase

Question 16

A safety report is released that contends that sport utility vehicles are prone to roll over during crashes.At the same time,the price of steel (used to produce motor vehicles)increases.The net effect of these two incidents on the market for sport utility vehicles is a(n):

Accepted Answer

A)  decrease in price and an increase in equilibrium quantity. 
B)  decrease in price and a decrease in equilibrium quantity. 
C)  increase in price and a decrease in equilibrium quantity. 
D)  indeterminate change in price and a decrease in equilibrium quantity. 
A)  decrease in price and an increase in equilibrium quantity. 
B)  decrease in price and a decrease in equilibrium quantity. 
C)  increase in price and a decrease in equilibrium quantity. 
D)  indeterminate change in price and a decrease in equilibrium quantity.

Question 17

The general consensus on minimum wage laws is that they:

Accepted Answer

A)  do create some unemployment. 
B)  affect workers at all skill levels. 
C)  lead to extremely low rates of unemployment. 
D)  increase employment possibilities for teenagers. 
A)  do create some unemployment. 
B)  affect workers at all skill levels. 
C)  lead to extremely low rates of unemployment. 
D)  increase employment possibilities for teenagers.

Question 18

The main purpose of government price controls is to keep prices from rising above their equilibrium levels.

Accepted Answer

A) True 
 B)False

Question 19

If a price ceiling of $4.00 per gallon is imposed on gasoline,and the market equilibrium price is $4.50,then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 20

The graph below most likely depicts a(n):

Accepted Answer

A)  supply increase. 
B)  supply decrease. 
C)  decrease in demand. 
D)  increase in demand. 
A)  supply increase. 
B)  supply decrease. 
C)  decrease in demand. 
D)  increase in demand.

Exam 5: Markets in Motion and Price Controls

If the government removes a binding price floor from a market,then the price paid by buyers will

If market demand decreases and market supply increases,then equilibrium quantity will (be)____ and equilibrium price will (be)____.

Which of the following is false?

When both supply and demand shift in the same direction,the change in the equilibrium quantity traded will be in the same direction as the shifting curves.

A price floor is a legal minimum on the price at which a good or service can be sold.

Exhibit 5-9 Refer to Exhibit 5-9.The price ceiling shown in panel (a)

If the equilibrium price of widgets is $22,and then a price ceiling of $24 is imposed by the government,as a result,

If a price ceiling of $5 per gallon is imposed on gasoline,and the market equilibrium price is $4.50,then the price ceiling is a binding constraint on the market.

Whenever there is a shortage at a particular price,the quantity sold at that price will equal:

A price floor will be binding only if it is set

Assume that coffee and tea are substitutes for each other.If weather conditions cause a substantial portion of the available coffee crop to be destroyed,then most probably:

An increase in the price of a close substitute for good A will:

Whenever a price floor is imposed above equilibrium price,it is true that:

In an attempt to reduce poaching of elephant ivory tusks,officials in Kenya burned illegally gathered ivory.Using your understanding of shifts in supply and demand,will this turn out to be a helpful or hurtful move on the Kenyan government's part?

If market demand increases and market supply decreases,then equilibrium quantity will (be)____ and equilibrium price will (be)____.

A safety report is released that contends that sport utility vehicles are prone to roll over during crashes.At the same time,the price of steel (used to produce motor vehicles)increases.The net effect of these two incidents on the market for sport utility vehicles is a(n):

The general consensus on minimum wage laws is that they:

The main purpose of government price controls is to keep prices from rising above their equilibrium levels.

If a price ceiling of $4.00 per gallon is imposed on gasoline,and the market equilibrium price is $4.50,then the price ceiling is a binding constraint on the market.

The graph below most likely depicts a(n):

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

If market demand decreases and market supply increases,then equilibrium quantity will (be) and equilibrium price will (be).

If market demand increases and market supply decreases,then equilibrium quantity will (be) and equilibrium price will (be).