Question 1

-Refer to the graph above to answer this question.What would be the effect of a price floor set $20 above the equilibrium price?

Accepted Answer

A) A surplus of 100 units. 
B) A shortage of 100 units. 
C) A surplus of 50 units. 
D) There would be neither a surplus nor a shortage. 
E) The product would be overpriced. 
A) A surplus of 100 units. 
B) A shortage of 100 units. 
C) A surplus of 50 units. 
D) There would be neither a surplus nor a shortage. 
E) The product would be overpriced.

Question 2

-Refer to the graph above to answer this question.If the government imposes an effective price ceiling of $4,what will be the new price and quantity in the market?

Accepted Answer

A) $5 and 30 units 
B) $4 and 30 units 
C) $6 and 35 units 
D) $6 and 40 units 
A) $5 and 30 units 
B) $4 and 30 units 
C) $6 and 35 units 
D) $6 and 40 units

Question 3

-Graphically,what is the effect of imposing an excise tax on a product?

Accepted Answer

A) It will shift both the supply and the demand curve for the product to the left. 
B) It will shift the supply curve for the product to the left. 
C) It will shift the supply curve for the product to the right. 
D) It will shift both the supply and the demand curve for the product to the right. 
E) It will shift the supply curve for the product to the left and the demand curve to the right. 
A) It will shift both the supply and the demand curve for the product to the left. 
B) It will shift the supply curve for the product to the left. 
C) It will shift the supply curve for the product to the right. 
D) It will shift both the supply and the demand curve for the product to the right. 
E) It will shift the supply curve for the product to the left and the demand curve to the right.

Question 4

Table 3.2 describes the market for day-care workers in the city of Vishna (quantity of workers in hundreds).
  
-Refer to Table 3.2 to answer this question.What would happen if the government were to establish a minimum wage of $6.50 an hour?

Accepted Answer

A) The wage would stay at $6,and there would be no unemployment. 
B) The equilibrium wage would rise to $6.50,and there would be no unemployment. 
C) The number employed would increase by 100. 
D) There would be 200 day-care workers unemployed. 
E) The day-care centres would have difficulty finding sufficient workers. 
A) The wage would stay at $6,and there would be no unemployment. 
B) The equilibrium wage would rise to $6.50,and there would be no unemployment. 
C) The number employed would increase by 100. 
D) There would be 200 day-care workers unemployed. 
E) The day-care centres would have difficulty finding sufficient workers.

Question 5

-Refer to the above graph to answer this question.If the demand and supply were both to increase by 200 units,what would be the resulting equilibrium price and quantity?

Accepted Answer

A) $60 and 700. 
B) $60 and 800. 
C) $60 and 1,000. 
D) $70 and 700. 
E) $70 and 800. 
A) $60 and 700. 
B) $60 and 800. 
C) $60 and 1,000. 
D) $70 and 700. 
E) $70 and 800.

Question 6

Suppose supply is fixed at 35 units.
  
-Refer to Figure 3.14 to answer this question.If this market is originally in equilibrium and demand increases by 20,what will be the new equilibrium price and quantity?

Accepted Answer

A) $3 and 45 units. 
B) $5 and 35 units. 
C) $5 and 45 units. 
D) $7 and 35 units. 
A) $3 and 45 units. 
B) $5 and 35 units. 
C) $5 and 45 units. 
D) $7 and 35 units.

Question 7

What is meant by an illegal market?

Accepted Answer

A) An allocation system where sellers are allowed to determine the method of allocation on the basis of their own preferences. 
B) A market where products are bought and sold at a price above a government imposed price ceiling. 
C) The effect which a price change has on real income and therefore on the quantity demanded of a product. 
D) A mechanism to bring buyers and sellers together. 
A) An allocation system where sellers are allowed to determine the method of allocation on the basis of their own preferences. 
B) A market where products are bought and sold at a price above a government imposed price ceiling. 
C) The effect which a price change has on real income and therefore on the quantity demanded of a product. 
D) A mechanism to bring buyers and sellers together.

Question 8

The following table shows the demand for,and supply of,soya milk in a particular market (the quantities are in thousands of liters per day):
  
-Refer to the above information to answer this question.Suppose that the government introduces an effective price ceiling which is 20 cents different from the equilibrium price and as a result an illegal market develops.What will be the illegal market price?

Accepted Answer

A) $2.10. 
B) $2.20. 
C) $2.30. 
D) $2.40. 
E) Cannot be determined. 
A) $2.10. 
B) $2.20. 
C) $2.30. 
D) $2.40. 
E) Cannot be determined.

Question 9

If an increase in the demand for a product is greater than the increase in the supply,what will be the immediate result?

Accepted Answer

A) A surplus. 
B) A shortage. 
C) The price will fall. 
D) Cannot be determined. 
A) A surplus. 
B) A shortage. 
C) The price will fall. 
D) Cannot be determined.

Question 10

-Invariably,price floors cause shortages and price ceilings cause surpluses.

Accepted Answer

A) True 
 B)False

Question 11

What will happen if both the demand for and the supply of a product decrease simultaneously?

Accepted Answer

A) The effect on the quantity traded is indeterminate. 
B) The quantity traded will increase. 
C) The quantity traded will decrease. 
D) The price will fall. 
A) The effect on the quantity traded is indeterminate. 
B) The quantity traded will increase. 
C) The quantity traded will decrease. 
D) The price will fall.

Question 12

-Refer to Table 3.3 to answer this question.Suppose that the government introduces an effective price ceiling which is $0.20 different from the equilibrium price and at the same time supply increases by 12 units.What will be the result?

Accepted Answer

A) Price will be $2.30 and quantity traded will be 164. 
B) Price will be $2.30 and quantity traded will be 152. 
C) Price will be $1.90 and quantity traded will be 156. 
D) Price will be $1.90 and quantity sold will be 144. 
E) Equilibrium price and quantity will be $1.90 and 156. 
A) Price will be $2.30 and quantity traded will be 164. 
B) Price will be $2.30 and quantity traded will be 152. 
C) Price will be $1.90 and quantity traded will be 156. 
D) Price will be $1.90 and quantity sold will be 144. 
E) Equilibrium price and quantity will be $1.90 and 156.

Question 13

Why is the market's allocation of products preferable to that of either the producers or of the government?

Accepted Answer

A) Because it ensures that even the poor will be able to afford to buy everything. 
B) Because it ensures that only people who really need certain products will be able to afford them. 
C) Because it ensures that both demand and supply factors are taken into consideration. 
D) Because it will mean that scarce resources are available at low prices. 
E) Because it ensures that the income distribution of the population is ignored. 
A) Because it ensures that even the poor will be able to afford to buy everything. 
B) Because it ensures that only people who really need certain products will be able to afford them. 
C) Because it ensures that both demand and supply factors are taken into consideration. 
D) Because it will mean that scarce resources are available at low prices. 
E) Because it ensures that the income distribution of the population is ignored.

Question 14

-Refer to the graph above to answer this question.What would be the result if an effective price ceiling is set which is $2 different from the equilibrium price?

Accepted Answer

A) The price would be above equilibrium and a surplus of 60 would be produced. 
B) The price would be below equilibrium and a shortage of 60 would be produced. 
C) The price would be above equilibrium and a shortage of 60 would be produced. 
D) The price would be below equilibrium and a surplus of 60 would be produced. 
A) The price would be above equilibrium and a surplus of 60 would be produced. 
B) The price would be below equilibrium and a shortage of 60 would be produced. 
C) The price would be above equilibrium and a shortage of 60 would be produced. 
D) The price would be below equilibrium and a surplus of 60 would be produced.

Question 15

-If the demand increases and the supply decreases,it is impossible to say what will happen to the price.

Accepted Answer

A) True 
 B)False

Question 16

Table 3.2 describes the market for day-care workers in the city of Vishna (quantity of workers in hundreds).
  
-Under what circumstances might an illegal market exist?

Accepted Answer

A) When a price ceiling is imposed. 
B) When a price floor is imposed. 
C) When price is not at equilibrium. 
D) When there is a big surplus of a product. 
A) When a price ceiling is imposed. 
B) When a price floor is imposed. 
C) When price is not at equilibrium. 
D) When there is a big surplus of a product.

Question 17

The data shows the demand and supply for wheat:
quantity of bushels per year (in million)
  
-Refer to the information above to answer this question.What are the implications if the wheat market is in equilibrium?

Accepted Answer

A) The market price would be $10 per bushel and there would be a shortage of 20 bushels of wheat. 
B) The market price would be $12 per bushel and there would be a shortage of 10 bushels of wheat. 
C) The market price would be $14 per bushel and 20 bushels of wheat would be demanded. 
D) The market price would be $16 per bushel and there would be a surplus of 10 bushels of wheat. 
E) The market price would be $18 per bushel and there would be a surplus of 20 bushels of wheat. 
A) The market price would be $10 per bushel and there would be a shortage of 20 bushels of wheat. 
B) The market price would be $12 per bushel and there would be a shortage of 10 bushels of wheat. 
C) The market price would be $14 per bushel and 20 bushels of wheat would be demanded. 
D) The market price would be $16 per bushel and there would be a surplus of 10 bushels of wheat. 
E) The market price would be $18 per bushel and there would be a surplus of 20 bushels of wheat.

Question 18

Under what circumstances can an illegal market exist?

Accepted Answer

A) When the price of a product is above equilibrium. 
B) Whenever supply exceeds demand. 
C) When a price ceiling is imposed. 
D) When a price floor is imposed. 
A) When the price of a product is above equilibrium. 
B) Whenever supply exceeds demand. 
C) When a price ceiling is imposed. 
D) When a price floor is imposed.

Question 19

Which of the following statements is true about rent controls?

Accepted Answer

A) It makes more apartments available for people. 
B) It can often cause a surplus of apartments. 
C) It leads to a more equitable distribution of apartments. 
D) It encourages increased investment in apartments. 
E) It leads to a shortage of apartments. 
A) It makes more apartments available for people. 
B) It can often cause a surplus of apartments. 
C) It leads to a more equitable distribution of apartments. 
D) It encourages increased investment in apartments. 
E) It leads to a shortage of apartments.

Question 20

Suppose a surplus of corn is created by the government's imposition of a price floor.List 5 ways the government can deal with a surplus.

Accepted Answer

The government can:
· store it

-Refer to the graph above to answer this question.What would be the effect of a price floor set $20 above the equilibrium price?

-Refer to the graph above to answer this question.If the government imposes an effective price ceiling of $4,what will be the new price and quantity in the market?

-Graphically,what is the effect of imposing an excise tax on a product?

Table 3.2 describes the market for day-care workers in the city of Vishna (quantity of workers in hundreds). -Refer to Table 3.2 to answer this question.What would happen if the government were to establish a minimum wage of $6.50 an hour?

-Refer to the above graph to answer this question.If the demand and supply were both to increase by 200 units,what would be the resulting equilibrium price and quantity?

Suppose supply is fixed at 35 units. -Refer to Figure 3.14 to answer this question.If this market is originally in equilibrium and demand increases by 20,what will be the new equilibrium price and quantity?

What is meant by an illegal market?

If an increase in the demand for a product is greater than the increase in the supply,what will be the immediate result?

-Invariably,price floors cause shortages and price ceilings cause surpluses.

What will happen if both the demand for and the supply of a product decrease simultaneously?

-Refer to Table 3.3 to answer this question.Suppose that the government introduces an effective price ceiling which is $0.20 different from the equilibrium price and at the same time supply increases by 12 units.What will be the result?

Why is the market's allocation of products preferable to that of either the producers or of the government?

-Refer to the graph above to answer this question.What would be the result if an effective price ceiling is set which is $2 different from the equilibrium price?

-If the demand increases and the supply decreases,it is impossible to say what will happen to the price.

Table 3.2 describes the market for day-care workers in the city of Vishna (quantity of workers in hundreds). -Under what circumstances might an illegal market exist?

The data shows the demand and supply for wheat: quantity of bushels per year (in million) -Refer to the information above to answer this question.What are the implications if the wheat market is in equilibrium?

Under what circumstances can an illegal market exist?

Which of the following statements is true about rent controls?

Suppose a surplus of corn is created by the government's imposition of a price floor.List 5 ways the government can deal with a surplus.

The Economic Problem

Demand and Supply: An Introduction

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 3: Demand and Supply: An Elaboration

-Refer to the graph above to answer this question.What would be the effect of a price floor set $20 above the equilibrium price?

-Refer to the graph above to answer this question.If the government imposes an effective price ceiling of $4,what will be the new price and quantity in the market?

-Graphically,what is the effect of imposing an excise tax on a product?

Table 3.2 describes the market for day-care workers in the city of Vishna (quantity of workers in hundreds). -Refer to Table 3.2 to answer this question.What would happen if the government were to establish a minimum wage of $6.50 an hour?

-Refer to the above graph to answer this question.If the demand and supply were both to increase by 200 units,what would be the resulting equilibrium price and quantity?

Suppose supply is fixed at 35 units. -Refer to Figure 3.14 to answer this question.If this market is originally in equilibrium and demand increases by 20,what will be the new equilibrium price and quantity?

What is meant by an illegal market?

If an increase in the demand for a product is greater than the increase in the supply,what will be the immediate result?

-Invariably,price floors cause shortages and price ceilings cause surpluses.

What will happen if both the demand for and the supply of a product decrease simultaneously?

-Refer to Table 3.3 to answer this question.Suppose that the government introduces an effective price ceiling which is $0.20 different from the equilibrium price and at the same time supply increases by 12 units.What will be the result?

Why is the market's allocation of products preferable to that of either the producers or of the government?

-Refer to the graph above to answer this question.What would be the result if an effective price ceiling is set which is $2 different from the equilibrium price?

-If the demand increases and the supply decreases,it is impossible to say what will happen to the price.

Table 3.2 describes the market for day-care workers in the city of Vishna (quantity of workers in hundreds). -Under what circumstances might an illegal market exist?

The data shows the demand and supply for wheat: quantity of bushels per year (in million) -Refer to the information above to answer this question.What are the implications if the wheat market is in equilibrium?

Under what circumstances can an illegal market exist?

Which of the following statements is true about rent controls?

Suppose a surplus of corn is created by the government's imposition of a price floor.List 5 ways the government can deal with a surplus.

The Economic Problem

Demand and Supply: An Introduction

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters