Question 1

Exhibit 5-9   Refer to Exhibit 5-9.A binding price ceiling is shown in

Accepted Answer

A)  panel (a) only. 
B)  panel (b) only. 
C)  both panel (a) and panel (b). 
D)  neither panel (a) nor panel (b). 
A)  panel (a) only. 
B)  panel (b) only. 
C)  both panel (a) and panel (b). 
D)  neither panel (a) nor panel (b).

Question 2

To say that a price floor is binding is to say that the price floor

Accepted Answer

A)  results in a shortage. 
B)  is set below the equilibrium price. 
C)  causes quantity supplied to exceed quantity demanded. 
D)  All of the above are correct. 
A)  results in a shortage. 
B)  is set below the equilibrium price. 
C)  causes quantity supplied to exceed quantity demanded. 
D)  All of the above are correct.

Question 3

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the surplus?

Accepted Answer

A)  An increase in demand. 
B)  A decrease in demand. 
C)  An increase in supply. 
D)  None of the above; there is no surplus. 
A)  An increase in demand. 
B)  A decrease in demand. 
C)  An increase in supply. 
D)  None of the above; there is no surplus.

Question 4

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

Question 5

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
  Refer to Exhibit 5-3.If D2 and S2 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively.

Accepted Answer

A)  $12; 12 
B)  $10; 12 
C)  $8; 15 
D)  $6; 18 
A)  $12; 12 
B)  $10; 12 
C)  $8; 15 
D)  $6; 18

Question 7

Exhibit 5-7   Refer to Exhibit 5-7.If the government intervenes in the market for milk and sets a price floor of $3.50,the result is:

Accepted Answer

A)  a shortage of 500 gallons of milk. 
B)  a surplus of 500 gallons of milk. 
C)  that some consumers will not be able to buy milk who wish to purchase it at that price. 
D)  both a. and c. are correct. 
A)  a shortage of 500 gallons of milk. 
B)  a surplus of 500 gallons of milk. 
C)  that some consumers will not be able to buy milk who wish to purchase it at that price. 
D)  both a. and c. are correct.

Question 8

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 ceiling of $6:

Accepted Answer

A)  producers will be unable to sell all the units that they desire to at that price. 
B)  consumers will be able to purchase as many units as desired at that price. 
C)  equilibrium will be achieved. 
D)  only 8 units of output will be traded. 
A)  producers will be unable to sell all the units that they desire to at that price. 
B)  consumers will be able to purchase as many units as desired at that price. 
C)  equilibrium will be achieved. 
D)  only 8 units of output will be traded.

Question 9

If incomes are rising,in the market for a normal good,

Accepted Answer

A)  its price will rise and the quantity exchanged will rise. 
B)  its price will rise and the quantity exchanged will fall. 
C)  its price will fall and the quantity exchanged will rise. 
D)  its price will fall and the quantity exchanged will fall. 
A)  its price will rise and the quantity exchanged will rise. 
B)  its price will rise and the quantity exchanged will fall. 
C)  its price will fall and the quantity exchanged will rise. 
D)  its price will fall and the quantity exchanged will fall.

Question 10

In an effort to reduce the surplus of dairy products,agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers)in 1996-1997.How did this influence the market for beef?

Accepted Answer

A)  demand increased, leading to higher beef prices 
B)  demand decreased, leading to lower beef prices 
C)  supply increased, leading to lower beef prices 
D)  supply decreased, leading to higher beef prices 
A)  demand increased, leading to higher beef prices 
B)  demand decreased, leading to lower beef prices 
C)  supply increased, leading to lower beef prices 
D)  supply decreased, leading to higher beef prices

Question 11

If tastes for a good increased and the price of a substitute good decreased at the same time,as a result:

Accepted Answer

A)  prices would rise. 
B)  prices would fall. 
C)  larger quantities to be exchanged. 
D)  we would not know which direction either prices or quantities exchanged would be altered without more information. 
A)  prices would rise. 
B)  prices would fall. 
C)  larger quantities to be exchanged. 
D)  we would not know which direction either prices or quantities exchanged would be altered without more information.

Question 12

Technological progress increases the efficiency of mass producing HDTV-capable television sets.At the same time,more cable and television networks begin broadcasting in HDTV format,increasing the appeal of HDTV-capable television sets.On the basis of this information,what can be said about conditions in the HDTV market?

Accepted Answer

A)  The equilibrium quantity and price of HDTV-capable sets will increase. 
B)  The equilibrium quantity of HDTV-capable sets will increase and price will decrease. 
C)  The equilibrium quantity of HDTV-capable sets will increase and what happens to price is indeterminate. 
D)  The equilibrium quantity of HDTV-capable sets will decrease and price will increase. 
A)  The equilibrium quantity and price of HDTV-capable sets will increase. 
B)  The equilibrium quantity of HDTV-capable sets will increase and price will decrease. 
C)  The equilibrium quantity of HDTV-capable sets will increase and what happens to price is indeterminate. 
D)  The equilibrium quantity of HDTV-capable sets will decrease and price will increase.

Question 13

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the shortage?

Accepted Answer

A)  an increase in demand 
B)  a decrease in demand 
C)  a decrease in supply 
D)  a lower price ceiling 
A)  an increase in demand 
B)  a decrease in demand 
C)  a decrease in supply 
D)  a lower price ceiling

Question 14

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)  no sellers actually benefit. 
B)  some sellers benefit, but no sellers are harmed. 
C)  some sellers benefit, and some sellers are harmed. 
D)  all sellers benefit. 
A)  no sellers actually benefit. 
B)  some sellers benefit, but no sellers are harmed. 
C)  some sellers benefit, and some sellers are harmed. 
D)  all sellers benefit.

Question 15

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
  Refer to Exhibit 5-3.If D1 and S1 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively.

Accepted Answer

A)  $8; 15 
B)  $6; 13 
C)  $4; 16 
D)  $4; 11 
A)  $8; 15 
B)  $6; 13 
C)  $4; 16 
D)  $4; 11

Question 16

An increase in costs associated with additional security measures taken by the airlines is most likely to lead to:

Accepted Answer

A)  a decrease in equilibrium price and a decrease in equilibrium quantity. 
B)  a decrease in equilibrium price and an increase in equilibrium quantity. 
C)  an increase in equilibrium price and a decrease in equilibrium quantity. 
D)  an increase in equilibrium price and no change equilibrium quantity. 
A)  a decrease in equilibrium price and a decrease in equilibrium quantity. 
B)  a decrease in equilibrium price and an increase in equilibrium quantity. 
C)  an increase in equilibrium price and a decrease in equilibrium quantity. 
D)  an increase in equilibrium price and no change equilibrium quantity.

Question 17

Both price and quantity will increase when there is a(n)

Accepted Answer

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

Question 18

A more efficient process for refining oil into gasoline is developed.As a result,the market price of gasoline:

Accepted Answer

A)  and the quantity of gasoline purchased both increase. 
B)  increases and the quantity of gasoline purchased falls. 
C)  decreases and the quantity of gasoline purchased rises. 
D)  decreases and the demand curve for gasoline shifts to the right. 
A)  and the quantity of gasoline purchased both increase. 
B)  increases and the quantity of gasoline purchased falls. 
C)  decreases and the quantity of gasoline purchased rises. 
D)  decreases and the demand curve for gasoline shifts to the right.

Question 19

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A)  results in a surplus. 
B)  is set above the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct. 
A)  results in a surplus. 
B)  is set above the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct.

Question 20

The invention of machinery that can double the amount of gold extracted from raw ore will likely:

Accepted Answer

A)  raise the world price of gold to pay for the new machinery. 
B)  lower the world price of gold because any given amount can now be produced more cheaply. 
C)  raise the world price of gold because miners' wages must double as their productivity doubles. 
D)  lower the world price of gold only if new mining companies are not allowed to enter the industry. 
A)  raise the world price of gold to pay for the new machinery. 
B)  lower the world price of gold because any given amount can now be produced more cheaply. 
C)  raise the world price of gold because miners' wages must double as their productivity doubles. 
D)  lower the world price of gold only if new mining companies are not allowed to enter the industry.

Exam 5: Markets in Motion and Price Controls

Exhibit 5-9 Refer to Exhibit 5-9.A binding price ceiling is shown in

To say that a price floor is binding is to say that the price floor

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the surplus?

If a price floor is not binding,then

A price floor set above the equilibrium price is binding.

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.If D2 and S2 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively.

Exhibit 5-7 Refer to Exhibit 5-7.If the government intervenes in the market for milk and sets a price floor of $3.50,the result is:

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 ceiling of $6:

If incomes are rising,in the market for a normal good,

In an effort to reduce the surplus of dairy products,agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers)in 1996-1997.How did this influence the market for beef?

If tastes for a good increased and the price of a substitute good decreased at the same time,as a result:

Assume there is a price ceiling imposed on a good which is below the equilibrium price.Which of the following changes would reduce the size of the shortage?

When a binding price floor is imposed on a market to benefit sellers,

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.If D1 and S1 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively.

An increase in costs associated with additional security measures taken by the airlines is most likely to lead to:

Both price and quantity will increase when there is a(n)

A more efficient process for refining oil into gasoline is developed.As a result,the market price of gasoline:

To say that a price ceiling is nonbinding is to say that the price ceiling

The invention of machinery that can double the amount of gold extracted from raw ore will likely:

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.If D₂ and S₂ represent the demand and supply schedules in a particular market,the equilibrium price and quantity are and ,respectively.

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 ceiling of $6:

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.If D₁ and S₁ represent the demand and supply schedules in a particular market,the equilibrium price and quantity are and ,respectively.