Question 1

The absolute price of a good is the price of that good in terms of another good.

Accepted Answer

A) True 
 B)False

Question 2

-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $15.The number of units that would be exchanged in this market would be

Accepted Answer

A)  150,since that is the equilibrium quantity and the price ceiling is above the equilibrium price. 
B)  80,since that is the number of units demanded at the price ceiling. 
C)  260,since that is the number of units supplied at the price ceiling. 
D)  170,since that is the average of the quantity demanded and the quantity supplied at the price ceiling. 
A)  150,since that is the equilibrium quantity and the price ceiling is above the equilibrium price. 
B)  80,since that is the number of units demanded at the price ceiling. 
C)  260,since that is the number of units supplied at the price ceiling. 
D)  170,since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question 3

-Refer to Exhibit 4-3.If price P1 is a price ceiling,then

Accepted Answer

A)  there is a surplus in the market for good X. 
B)  the highest price that can legally be charged in this market is P3. 
C)  the price at which exchange legally takes place is P2. 
D)  the price at which exchange legally takes place is P1. 
E)  both a and b 
A)  there is a surplus in the market for good X. 
B)  the highest price that can legally be charged in this market is P3. 
C)  the price at which exchange legally takes place is P2. 
D)  the price at which exchange legally takes place is P1. 
E)  both a and b

Question 4

-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $11.How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?

Accepted Answer

A)  50 
B)  30 
C)  40 
D)  70 
A)  50 
B)  30 
C)  40 
D)  70

Question 5

The need for a rationing device results from scarcity.

Accepted Answer

A) True 
 B)False

Question 6

Price ceilings and price floors

Accepted Answer

A)  shift demand and supply curves and therefore have no effect upon the rationing function of prices. 
B)  interfere with the rationing function of prices. 
C)  make the rationing function of free markets more efficient. 
D)  cause surpluses and shortages,respectively. 
A)  shift demand and supply curves and therefore have no effect upon the rationing function of prices. 
B)  interfere with the rationing function of prices. 
C)  make the rationing function of free markets more efficient. 
D)  cause surpluses and shortages,respectively.

Question 7

Which of the following statement is false based on information presented in the textbook?

Accepted Answer

A)  There is evidence of a shortage in the market for kidneys (for transplants). 
B)  The waiting list for transplanted kidneys is used as a non-price rationing device. 
C)  There is a price ceiling in the market for transplanted kidneys at a price of $0. 
D)  In the market for transplanted kidneys the legal price is the same as the equilibrium price. 
E)  ​It is currently unlawful to buy or sell kidneys at any positive price. 
A)  There is evidence of a shortage in the market for kidneys (for transplants). 
B)  The waiting list for transplanted kidneys is used as a non-price rationing device. 
C)  There is a price ceiling in the market for transplanted kidneys at a price of $0. 
D)  In the market for transplanted kidneys the legal price is the same as the equilibrium price. 
E)  ​It is currently unlawful to buy or sell kidneys at any positive price.

Question 8

Jake is an excellent barber.However,all customers who come to him for a haircut must buy a bottle of shampoo.This type of arrangement is known as

Accepted Answer

A)  a tie-in sale. 
B)  a sweetheart deal. 
C)  an exclusive contract. 
D)  a cross subsidy. 
A)  a tie-in sale. 
B)  a sweetheart deal. 
C)  an exclusive contract. 
D)  a cross subsidy.

Question 9

Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of an increase in minimum wage.

Accepted Answer

If the minimum wage is imposed above the

Question 10

7/30/2017 4:16 PM
  
-Refer to Situation 4-1.Before the oil embargo,the price ceiling on gasoline had no noticeable effect on the market.What is the most likely explanation for this?

Accepted Answer

A)  The equilibrium price of gasoline was probably below the price ceiling. 
B)  The demand curve for gasoline in the 1970s was vertical. 
C)  The supply curve for gasoline in the 1970s was vertical. 
D)  The equilibrium price of gasoline was probably above the price ceiling. 
A)  The equilibrium price of gasoline was probably below the price ceiling. 
B)  The demand curve for gasoline in the 1970s was vertical. 
C)  The supply curve for gasoline in the 1970s was vertical. 
D)  The equilibrium price of gasoline was probably above the price ceiling.

Question 11

Suppose that the price of peanut butter is $3 per pound and the price of almond butter is $5 per pound.If the price of peanut butter rises to $3.60 and the price of almond butter rises to $5.50,then the absolute price of peanut butter has _______________ and the relative price of peanut butter has _______________.

Accepted Answer

A)  risen; fallen 
B)  fallen; risen 
C)  risen; risen 
D)  fallen; fallen 
A)  risen; fallen 
B)  fallen; risen 
C)  risen; risen 
D)  fallen; fallen

Question 12

If the minimum wage law sets a price floor that is below the equilibrium wage in the unskilled labor market,the minimum wage will create a shortage of unskilled labor.

Accepted Answer

A) True 
 B)False

Question 13

-Refer to Exhibit 4-6.Suppose the minimum wage is set at $5.The result will be

Accepted Answer

A)  unemployment. 
B)  a shortage of unskilled labor. 
C)  no impact on the unskilled labor market. 
D)  a prolonged surplus of unskilled labor. 
E)  none of the above 
A)  unemployment. 
B)  a shortage of unskilled labor. 
C)  no impact on the unskilled labor market. 
D)  a prolonged surplus of unskilled labor. 
E)  none of the above

Question 14

Price ceilings sometimes result in some buyers and sellers purchasing the good at prohibited prices.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that the government sets a price floor in the market for milk at $2.15 per gallon of milk.If the equilibrium price of milk is $1.99,the result of the price floor will be a _____________ of milk and ____________ exchanges will be made with the price floor than would be made in a free market.

Accepted Answer

A)  shortage; fewer 
B)  surplus; fewer 
C)  shortage; more 
D)  surplus; more 
A)  shortage; fewer 
B)  surplus; fewer 
C)  shortage; more 
D)  surplus; more

Question 16

-Refer to Exhibit 4-3.Which of the following is true?

Accepted Answer

A)  If price P1 is set as a price ceiling,the price ceiling will have an effect on the market for good X. 
B)  If price P1 is set as a price floor,the price floor will have an effect on the market for good X. 
C)  Price P1 is the equilibrium price for good X. 
D)  If price P1 is set as a price floor,then it is the highest price that can legally be charged in the market for good X. 
A)  If price P1 is set as a price ceiling,the price ceiling will have an effect on the market for good X. 
B)  If price P1 is set as a price floor,the price floor will have an effect on the market for good X. 
C)  Price P1 is the equilibrium price for good X. 
D)  If price P1 is set as a price floor,then it is the highest price that can legally be charged in the market for good X.

Question 17

A price floor creates a situation in which one party wins and another party loses,and the gains for the winner are equal to the losses for the loser.

Accepted Answer

A) True 
 B)False

Question 18

A price ceiling is a government-mandated

Accepted Answer

A)  minimum price below which legal trades cannot be made. 
B)  maximum price above which legal trades cannot be made. 
C)  minimum price above which legal trades cannot be made. 
D)  maximum price below which legal trades cannot be made. 
A)  minimum price below which legal trades cannot be made. 
B)  maximum price above which legal trades cannot be made. 
C)  minimum price above which legal trades cannot be made. 
D)  maximum price below which legal trades cannot be made.

Question 19

-Refer to Exhibit 4-11.Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.How many fewer units would be exchanged at the price ceiling than would be exchanged if the market for good ABC were a free market?

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
E)  100 
A)  20 
B)  40 
C)  60 
D)  80 
E)  100

Question 20

-Refer to Exhibit 4-3.If price P3 is a price ceiling,then

Accepted Answer

A)  the price ceiling does not have an effect on the market for good X. 
B)  the price at which exchange takes place is P3. 
C)  the price at which exchange takes place is P2. 
D)  there is a shortage in the market for good X. 
E)  both a and c 
A)  the price ceiling does not have an effect on the market for good X. 
B)  the price at which exchange takes place is P3. 
C)  the price at which exchange takes place is P2. 
D)  there is a shortage in the market for good X. 
E)  both a and c

Exam 4: Prices: Free,controlled,and Relative

The absolute price of a good is the price of that good in terms of another good.

-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $15.The number of units that would be exchanged in this market would be

-Refer to Exhibit 4-3.If price P1 is a price ceiling,then

-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $11.How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?

The need for a rationing device results from scarcity.

Price ceilings and price floors

Which of the following statement is false based on information presented in the textbook?

Jake is an excellent barber.However,all customers who come to him for a haircut must buy a bottle of shampoo.This type of arrangement is known as

Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of an increase in minimum wage.

7/30/2017 4:16 PM -Refer to Situation 4-1.Before the oil embargo,the price ceiling on gasoline had no noticeable effect on the market.What is the most likely explanation for this?

If the minimum wage law sets a price floor that is below the equilibrium wage in the unskilled labor market,the minimum wage will create a shortage of unskilled labor.

-Refer to Exhibit 4-6.Suppose the minimum wage is set at $5.The result will be

Price ceilings sometimes result in some buyers and sellers purchasing the good at prohibited prices.

Suppose that the government sets a price floor in the market for milk at $2.15 per gallon of milk.If the equilibrium price of milk is $1.99,the result of the price floor will be a _____________ of milk and ____________ exchanges will be made with the price floor than would be made in a free market.

-Refer to Exhibit 4-3.Which of the following is true?

A price floor creates a situation in which one party wins and another party loses,and the gains for the winner are equal to the losses for the loser.

A price ceiling is a government-mandated

-Refer to Exhibit 4-11.Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4.How many fewer units would be exchanged at the price ceiling than would be exchanged if the market for good ABC were a free market?

-Refer to Exhibit 4-3.If price P3 is a price ceiling,then

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

-Refer to Exhibit 4-3.If price P₁ is a price ceiling,then

Suppose that the government sets a price floor in the market for milk at $2.15 per gallon of milk.If the equilibrium price of milk is $1.99,the result of the price floor will be a _ of milk and exchanges will be made with the price floor than would be made in a free market.

-Refer to Exhibit 4-3.If price P₃ is a price ceiling,then