Question 1

Which of the following is true?

Accepted Answer

A)  It is possible to eliminate a surplus by raising a price floor sufficiently. 
B)  It is possible to create a surplus by raising a price ceiling sufficiently. 
C)  It is possible to eliminate a shortage by raising a price ceiling sufficiently. 
D)  It is possible to create a shortage by lowering a price floor sufficiently. 
A)  It is possible to eliminate a surplus by raising a price floor sufficiently. 
B)  It is possible to create a surplus by raising a price ceiling sufficiently. 
C)  It is possible to eliminate a shortage by raising a price ceiling sufficiently. 
D)  It is possible to create a shortage by lowering a price floor sufficiently.

Question 2

If a price ceiling is set above the equilibrium price it is not binding.

Accepted Answer

A) True 
 B)False

Question 3

If a nonbinding price floor is imposed on a market,then the

Accepted Answer

A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease. 
A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease.

Question 4

Assume a price ceiling is imposed at the current equilibrium price in the market for wheat.If the supply of wheat then decreases as a result of bad weather,then:

Accepted Answer

A)  a surplus of wheat will be created. 
B)  a shortage of wheat will be created. 
C)  the quantity of wheat traded remains the same. 
D)  the quantity of wheat supplied will increase. 
A)  a surplus of wheat will be created. 
B)  a shortage of wheat will be created. 
C)  the quantity of wheat traded remains the same. 
D)  the quantity of wheat supplied will increase.

Question 5

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
  Refer to Exhibit 5-3.Suppose that D1 and S1 are the prevailing demand and supply curves for a product.If the demand schedule changes from D1 to D2,then:

Accepted Answer

A)  equilibrium price decreases from $6 to $4. 
B)  equilibrium quantity decreases from 15 to 13. 
C)  equilibrium quantity increases from 13 to 18. 
D)  equilibrium price increases from $6 to $8. 
A)  equilibrium price decreases from $6 to $4. 
B)  equilibrium quantity decreases from 15 to 13. 
C)  equilibrium quantity increases from 13 to 18. 
D)  equilibrium price increases from $6 to $8.

Question 6

Prices have soared for parking facilities in downtown Dallas in recent months.Pressure from voters has convinced the Dallas City Council to impose a price ceiling of $5 on all parking garages and lots per day.What effect will this likely have on the market for parking spaces in Dallas? Who will gain? Who will lose?

Accepted Answer

The $5 price ceiling will likely result

Question 7

Exhibit 5-5   Refer to Exhibit 5-5.The movement from ____ to ____ is consistent with a successful advertising campaign that claims wool keeps you warm.

Accepted Answer

A)  Point A; Point B 
B)  Point A; Point F 
C)  Point A; Point D 
D)  Point A; Point H 
A)  Point A; Point B 
B)  Point A; Point F 
C)  Point A; Point D 
D)  Point A; Point H

Question 8

Which of the following is likely to result in a larger equilibrium quantity exchanged?

Accepted Answer

A)  An increase in both demand and supply. 
B)  A decrease in both demand and supply. 
C)  An increase in demand and a decrease in supply. 
D)  A decrease in demand and an increase in supply. 
A)  An increase in both demand and supply. 
B)  A decrease in both demand and supply. 
C)  An increase in demand and a decrease in supply. 
D)  A decrease in demand and an increase in supply.

Question 9

Pork from pigs can be used to produce bacon or sausage,but not both.If the price of bacon rises for some reason,then,everything else equal:

Accepted Answer

A)  the price of sausage will rise. 
B)  the price of sausage will fall. 
C)  the resources used to raise pigs will become less expensive. 
D)  the demand for bacon will decrease. 
A)  the price of sausage will rise. 
B)  the price of sausage will fall. 
C)  the resources used to raise pigs will become less expensive. 
D)  the demand for bacon will decrease.

Question 10

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 11

There is an increase in demand for personal computers at the same time their input costs fall.We would expect that:

Accepted Answer

A)  price will fall, but the effect on quantity sold is uncertain. 
B)  the quantity sold will decline, but the effect on price is uncertain. 
C)  the quantity sold will increase, but the effect on price is uncertain. 
D)  price will rise, but the effect on quantity sold is uncertain. 
A)  price will fall, but the effect on quantity sold is uncertain. 
B)  the quantity sold will decline, but the effect on price is uncertain. 
C)  the quantity sold will increase, but the effect on price is uncertain. 
D)  price will rise, but the effect on quantity sold is uncertain.

Question 12

If a price ceiling is not binding,then

Accepted Answer

A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  the market will be less efficient than it would be without the price ceiling. 
D)  there will be no effect on the market price or quantity sold. 
A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  the market will be less efficient than it would be without the price ceiling. 
D)  there will be no effect on the market price or quantity sold.

Question 13

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $1.50 per loaf:

Accepted Answer

A)  the equilibrium price of wheat will fall and a shortage of wheat will be created. 
B)  the quantity of wheat supplied will increase. 
C)  the quantity of wheat demanded will decrease. 
D)  there will be a shortage of bread. 
A)  the equilibrium price of wheat will fall and a shortage of wheat will be created. 
B)  the quantity of wheat supplied will increase. 
C)  the quantity of wheat demanded will decrease. 
D)  there will be a shortage of bread.

Question 14

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
  Refer to Exhibit 5-3.Suppose that D2 and S1 are the prevailing demand and supply curves for a product.If the demand schedule changes from D2 to D1,then:

Accepted Answer

A)  equilibrium price decreases from $6 to $4. 
B)  equilibrium quantity decreases from 15 to 13. 
C)  equilibrium quantity increases from 13 to 18. 
D)  equilibrium price increases from $6 to $8. 
A)  equilibrium price decreases from $6 to $4. 
B)  equilibrium quantity decreases from 15 to 13. 
C)  equilibrium quantity increases from 13 to 18. 
D)  equilibrium price increases from $6 to $8.

Question 15

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
  Refer to Exhibit 5-3.Suppose that D1 and S2 are the demand and supply schedules for Product A.If the government imposes a price floor of $6:

Accepted Answer

A)  a shortage of 5 units results. 
B)  a surplus of 5 units results. 
C)  a shortage of 10 units results. 
D)  the floor will have no impact on the quantity of Product A traded. 
A)  a shortage of 5 units results. 
B)  a surplus of 5 units results. 
C)  a shortage of 10 units results. 
D)  the floor will have no impact on the quantity of Product A traded.

Question 16

An increase in the price of inputs used to produce good A will:

Accepted Answer

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

Question 17

An increase in both equilibrium price and quantity is a consequence of:

Accepted Answer

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

Question 18

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 19

American consumers decide to boycott soccer balls made by Nike in support of a ban on child labor.Everything else being equal,the:

Accepted Answer

A)  price of Nike soccer balls will rise. 
B)  supply of Nike soccer balls will fall. 
C)  quantity of Nike soccer balls supplied will fall. 
D)  demand curve for Nike soccer balls shifts to the right. 
A)  price of Nike soccer balls will rise. 
B)  supply of Nike soccer balls will fall. 
C)  quantity of Nike soccer balls supplied will fall. 
D)  demand curve for Nike soccer balls shifts to the right.

Question 20

Exhibit 5-7   Refer to Exhibit 5-7.If the government were to remove a price ceiling of $2.00 per gallon in the milk market,the result would be:

Accepted Answer

A)  a decrease in price and increase in the quantity of milk supplied. 
B)  a decrease in price and increase in the quantity of milk demanded. 
C)  an increase in both price and the quantity of milk supplied. 
D)  an increase in both price and the quantity of milk demanded. 
A)  a decrease in price and increase in the quantity of milk supplied. 
B)  a decrease in price and increase in the quantity of milk demanded. 
C)  an increase in both price and the quantity of milk supplied. 
D)  an increase in both price and the quantity of milk demanded.

Exam 5: Markets in Motion and Price Controls

Which of the following is true?

If a price ceiling is set above the equilibrium price it is not binding.

If a nonbinding price floor is imposed on a market,then the

Assume a price ceiling is imposed at the current equilibrium price in the market for wheat.If the supply of wheat then decreases as a result of bad weather,then:

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D1 and S1 are the prevailing demand and supply curves for a product.If the demand schedule changes from D1 to D2,then:

Exhibit 5-5 Refer to Exhibit 5-5.The movement from ____ to ____ is consistent with a successful advertising campaign that claims wool keeps you warm.

Which of the following is likely to result in a larger equilibrium quantity exchanged?

Pork from pigs can be used to produce bacon or sausage,but not both.If the price of bacon rises for some reason,then,everything else equal:

A binding price ceiling causes quantity demanded to be less than quantity supplied.

There is an increase in demand for personal computers at the same time their input costs fall.We would expect that:

If a price ceiling is not binding,then

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $1.50 per loaf:

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D2 and S1 are the prevailing demand and supply curves for a product.If the demand schedule changes from D2 to D1,then:

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D1 and S2 are the demand and supply schedules for Product A.If the government imposes a price floor of $6:

An increase in the price of inputs used to produce good A will:

An increase in both equilibrium price and quantity is a consequence of:

A price ceiling set below the equilibrium price is nonbinding.

American consumers decide to boycott soccer balls made by Nike in support of a ban on child labor.Everything else being equal,the:

Exhibit 5-7 Refer to Exhibit 5-7.If the government were to remove a price ceiling of $2.00 per gallon in the milk market,the result would be:

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

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D₁ and S₁ are the prevailing demand and supply curves for a product.If the demand schedule changes from D₁ to D₂,then:

Exhibit 5-5 Refer to Exhibit 5-5.The movement from to is consistent with a successful advertising campaign that claims wool keeps you warm.

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D₂ and S₁ are the prevailing demand and supply curves for a product.If the demand schedule changes from D₂ to D₁,then:

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D₁ and S₂ are the demand and supply schedules for Product A.If the government imposes a price floor of $6: