Question 1

-Refer to the above graph to answer this question.What is true about the possible surpluses and shortages in this market if the price is set at $40?

Accepted Answer

A) There will be a shortage of 20 units. 
B) There will be a shortage of 40 units. 
C) There will be a surplus of 20 units. 
D) There will be a surplus of 50 units. 
E) None of the choices are correct. 
A) There will be a shortage of 20 units. 
B) There will be a shortage of 40 units. 
C) There will be a surplus of 20 units. 
D) There will be a surplus of 50 units. 
E) None of the choices are correct.

Question 2

What is meant by producers' preference?

Accepted Answer

A) The effect which a price change has on real income and therefore on the quantity demanded of a product. 
B) An allocation system where sellers are allowed to determine the method of allocation on the basis of their own preferences. 
C) The preference which a government shows to certain producers through the introduction of price floors. 
D) A government regulation stipulating the maximum price which can be charged for a product. 
A) The effect which a price change has on real income and therefore on the quantity demanded of a product. 
B) An allocation system where sellers are allowed to determine the method of allocation on the basis of their own preferences. 
C) The preference which a government shows to certain producers through the introduction of price floors. 
D) A government regulation stipulating the maximum price which can be charged for a product.

Question 3

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

Accepted Answer

A) A surplus of 100 units. 
B) A shortage of 100 units. 
C) 200 units would be sold. 
D) 300 units would be sold. 
E) There would be neither a surplus nor a shortage. 
A) A surplus of 100 units. 
B) A shortage of 100 units. 
C) 200 units would be sold. 
D) 300 units would be sold. 
E) There would be neither a surplus nor a shortage.

Question 4

-Refer to the above graph to answer this question.What is true about the possible surpluses and shortages in this market if the price is $1,000 above equilibrium?

Accepted Answer

A) There will be a shortage of 20. 
B) There will be a shortage of 40. 
C) There will be a surplus of 20. 
D) There will be a surplus of 40. 
E) Cannot be determined. 
A) There will be a shortage of 20. 
B) There will be a shortage of 40. 
C) There will be a surplus of 20. 
D) There will be a surplus of 40. 
E) Cannot be determined.

Question 5

Suppose that two concurrent changes occur in each of the following four different markets.What will happen to price and quantity traded in each case?
Changes affecting demand
1.The price of a substitute product decreases.
2.Incomes increases.
Changes affecting supply
A.The price of inputs decrease.
B.The number of suppliers decreases.
a)Changes 1 and A for a normal product.
b)Changes 2 and B for an inferior product.
c)Changes 2 and A for a normal product.
d)Changes 1 and B for a normal product.
a)price decrease and quantity indeterminate
b)price indeterminate and quantity decrease
c)price indeterminate and quantity increase
d)price indeterminate and quantity decrease

Accepted Answer

a)price decrease and quantity

Question 6

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

Accepted Answer

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

Question 7

-Refer to the information above to answer this question.All of the following statements except one are correct.Which is the exception?

Accepted Answer

A) The equilibrium price and quantity are $9 and 60. 
B) At a price of $7,there is a surplus of 40. 
C) At a price of $10,there is a surplus of 20. 
D) At a price of $8,there is a shortage of 20. 
A) The equilibrium price and quantity are $9 and 60. 
B) At a price of $7,there is a surplus of 40. 
C) At a price of $10,there is a surplus of 20. 
D) At a price of $8,there is a shortage of 20.

Question 8

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

Accepted Answer

A) A surplus of 100 units 
B) A shortage of 100 units 
C) 200 units would be sold 
D) There would be neither a surplus nor a shortage 
E) 300 units would be sold 
A) A surplus of 100 units 
B) A shortage of 100 units 
C) 200 units would be sold 
D) There would be neither a surplus nor a shortage 
E) 300 units would be sold

Question 9

What do economists mean when they speak of price as a rationing mechanism?

Accepted Answer

A) That all goods produced will be sold. 
B) Consumers get the products they want at prices they can afford. 
C) That shortages of goods in the market price will disappear as a result of price rising which results in the quantity demanded increasing and the quantity supplied decreasing. 
D) That shortages of goods in the market price will disappear as a result of price rising which results in the quantity demanded decreasing and the quantity supplied increasing. 
A) That all goods produced will be sold. 
B) Consumers get the products they want at prices they can afford. 
C) That shortages of goods in the market price will disappear as a result of price rising which results in the quantity demanded increasing and the quantity supplied decreasing. 
D) That shortages of goods in the market price will disappear as a result of price rising which results in the quantity demanded decreasing and the quantity supplied increasing.

Question 10

-Refer to the information above to answer this question.What will be the equilibrium price and quantity if a $2 per unit excise tax is imposed on this product?

Accepted Answer

A) $11 and 40. 
B) $11 and 80. 
C) $10 and 50. 
D) $10 and 70. 
E) $7 and 40. 
A) $11 and 40. 
B) $11 and 80. 
C) $10 and 50. 
D) $10 and 70. 
E) $7 and 40.

Question 11

State whether each of the following is an example of a price ceiling or a price floor.
a)Minimum-wage legislation.
b)Rent controls
c)Wartime price controls on the price of butter.
d)A freeze on credit card interest rates
e)Agricultural price supports

Accepted Answer

a)Price floor.
b)Pri

Question 12

-The table below shows the market for fuji apples in the country of Westchester.
   a)What is the equilibrium values of price and quantity? Suppose that the government imposes a price floor which is $0.50 different form the present equilibrium price.
b)What is the resulting shortage/surplus? Suppose,instead that the government imposes a price ceiling that is $1 different from the present equilibrium price.
c)What would be the resulting shortage/surplus?

Accepted Answer

a)$3 and 4

Question 13

-In each of the following cases,explain what effect the changes will have on the equilibrium price and quantity in the following markets:

Accepted Answer

a)Price indeterminate,quantity

Question 14

-Refer to the graph above to answer this question.What is the result if the government establishes minimum wage of $7 in this market?

Accepted Answer

A) Firms would employ 22,000 workers. 
B) There would be a shortage of 3,000 workers. 
C) 1,000 of the employed workers would be prepared to work for $1 an hour less. 
D) There would be 3,000 unemployed workers. 
E) 19,000 workers would be willing and able to work. 
A) Firms would employ 22,000 workers. 
B) There would be a shortage of 3,000 workers. 
C) 1,000 of the employed workers would be prepared to work for $1 an hour less. 
D) There would be 3,000 unemployed workers. 
E) 19,000 workers would be willing and able to work.

Question 15

What is a price control?

Accepted Answer

A) The price of a product which is set by the government. 
B) A government regulation stipulating the maximum price which can be charged for a product. 
C) A government regulation to set either a maximum or minimum price for a product. 
D) A government regulation stipulating the minimum price which can be charged for a product. 
A) The price of a product which is set by the government. 
B) A government regulation stipulating the maximum price which can be charged for a product. 
C) A government regulation to set either a maximum or minimum price for a product. 
D) A government regulation stipulating the minimum price which can be charged for a product.

Question 16

-Refer to Figure 3.15 to answer this question.What would be the result if an effective price ceiling is set that 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 17

-Explain the shifts in demand and/or supply that can result in the following observations: (Assume the demand curve is downward sloping and the supply curve is upward sloping. )
(a)Both price and quantity rise.
(b)Price rises,quantity falls.
(c)Price rises,quantity doesn't change.
(d)Quantity rises,price doesn't change.

Accepted Answer

(a)This will result from an increase in

Question 18

-Imposing a price ceiling often results in illegal markets and rationing schemes.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following type of firm would be most affected by minimum-wage legislation?

Accepted Answer

A) A company of management consultants. 
B) An airline company. 
C) A fast-food restaurant. 
D) A hospital. 
A) A company of management consultants. 
B) An airline company. 
C) A fast-food restaurant. 
D) A hospital.

Question 20

Distinguish between surplus and supply.

Accepted Answer

A surplus exists when quantity

-Refer to the above graph to answer this question.What is true about the possible surpluses and shortages in this market if the price is set at $40?

What is meant by producers' preference?

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

-Refer to the above graph to answer this question.What is true about the possible surpluses and shortages in this market if the price is $1,000 above equilibrium?

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

-Refer to the information above to answer this question.All of the following statements except one are correct.Which is the exception?

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

What do economists mean when they speak of price as a rationing mechanism?

-Refer to the information above to answer this question.What will be the equilibrium price and quantity if a $2 per unit excise tax is imposed on this product?

State whether each of the following is an example of a price ceiling or a price floor. a)Minimum-wage legislation. b)Rent controls c)Wartime price controls on the price of butter. d)A freeze on credit card interest rates e)Agricultural price supports

-In each of the following cases,explain what effect the changes will have on the equilibrium price and quantity in the following markets:

-Refer to the graph above to answer this question.What is the result if the government establishes minimum wage of $7 in this market?

What is a price control?

-Refer to Figure 3.15 to answer this question.What would be the result if an effective price ceiling is set that is $2 different from the equilibrium price?

-Imposing a price ceiling often results in illegal markets and rationing schemes.

Which of the following type of firm would be most affected by minimum-wage legislation?

Distinguish between surplus and supply.

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 above graph to answer this question.What is true about the possible surpluses and shortages in this market if the price is set at $40?

What is meant by producers' preference?

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

-Refer to the above graph to answer this question.What is true about the possible surpluses and shortages in this market if the price is $1,000 above equilibrium?

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

-Refer to the information above to answer this question.All of the following statements except one are correct.Which is the exception?

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

What do economists mean when they speak of price as a rationing mechanism?

-Refer to the information above to answer this question.What will be the equilibrium price and quantity if a $2 per unit excise tax is imposed on this product?

State whether each of the following is an example of a price ceiling or a price floor. a)Minimum-wage legislation. b)Rent controls c)Wartime price controls on the price of butter. d)A freeze on credit card interest rates e)Agricultural price supports

-In each of the following cases,explain what effect the changes will have on the equilibrium price and quantity in the following markets:

-Refer to the graph above to answer this question.What is the result if the government establishes minimum wage of $7 in this market?

What is a price control?

-Refer to Figure 3.15 to answer this question.What would be the result if an effective price ceiling is set that is $2 different from the equilibrium price?

-Imposing a price ceiling often results in illegal markets and rationing schemes.

Which of the following type of firm would be most affected by minimum-wage legislation?

Distinguish between surplus and supply.

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