Question 1

The need for a rationing device results from scarcity.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) If price P3 is set as a price ceiling it will have an effect on the market for good X. 
B) If price P3 is set as a price floor it will have an effect on the market for good X. 
C) Price P3 is the equilibrium price for good X. 
D) Price P3 is the highest price that can legally be charged in the market for good X. 
A) If price P3 is set as a price ceiling it will have an effect on the market for good X. 
B) If price P3 is set as a price floor it will have an effect on the market for good X. 
C) Price P3 is the equilibrium price for good X. 
D) Price P3 is the highest price that can legally be charged in the market for good X. B

Question 3

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

Accepted Answer

A) If price P1 is set as a price ceiling it will have an effect on the market for good X. 
B) If price P1 is set as a price floor it 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 it will have an effect on the market for good X. 
B) If price P1 is set as a price floor it 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

Question 4

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

Accepted Answer

A) the quantity exchanged is Q1. 
B) there is a surplus in the market for good X. 
C) it is the lowest price that can legally be charged in the market for good X. 
D) both b and c 
E) all of the above 
A) the quantity exchanged is Q1. 
B) there is a surplus in the market for good X. 
C) it is the lowest price that can legally be charged in the market for good X. 
D) both b and c 
E) all of the above

Question 5

Someone says,"Even though the equilibrium wage rate is $8 an hour in the unskilled labor market,if we impose a minimum wage of $10 an hour,no one currently working will lose his or her job." This person must believe that the

Accepted Answer

A) demand curve for unskilled labor is vertical. 
B) demand curve for unskilled labor is downward-sloping. 
C) supply curve for unskilled labor is downward-sloping. 
D) supply curve for unskilled labor is horizontal. 
E) none of the above. 
A) demand curve for unskilled labor is vertical. 
B) demand curve for unskilled labor is downward-sloping. 
C) supply curve for unskilled labor is downward-sloping. 
D) supply curve for unskilled labor is horizontal. 
E) none of the above.

Question 6

It is possible for the absolute price of a good to rise at the same time that the good's relative price is falling.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 4-7  
-Refer to Exhibit 4-7.The number of unskilled workers who want to work at the minimum wage is

Accepted Answer

A) N3. 
B) N1. 
C) N2. 
D) N2 - N1. 
A) N3. 
B) N1. 
C) N2. 
D) N2 - N1.

Question 8

Exhibit 4-8  
-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the producers' surplus at PF?

Accepted Answer

A) area 2 + 3 + 4 + 5 
B) area 2 + 3 
C) area 4 
D) area 6 
A) area 2 + 3 + 4 + 5 
B) area 2 + 3 
C) area 4 
D) area 6

Question 9

If goods are not rationed according to price,if follows that

Accepted Answer

A) they won't get rationed at all. 
B) some non-price rationing device will be used to ration the goods. 
C) first-come-first-served will necessarily be the rationing device used in the market. 
D) there will be surpluses in the market. 
E) none of the above 
A) they won't get rationed at all. 
B) some non-price rationing device will be used to ration the goods. 
C) first-come-first-served will necessarily be the rationing device used in the market. 
D) there will be surpluses in the market. 
E) none of the above

Question 10

The minimum wage is an example of a

Accepted Answer

A) price door. 
B) price wall. 
C) price floor. 
D) price ceiling. 
A) price door. 
B) price wall. 
C) price floor. 
D) price ceiling.

Question 11

Exhibit 4-4  
-Refer to Exhibit 4-4.Which of the following statements is false?

Accepted Answer

A) Graph (1): A price ceiling set at P2 would not have an impact on the market. 
B) Graph (2): As supply increases,equilibrium price remains constant. 
C) Graph (3): As demand increases,equilibrium quantity remains constant. 
D) Graph (4): As supply increases,equilibrium quantity increases. 
A) Graph (1): A price ceiling set at P2 would not have an impact on the market. 
B) Graph (2): As supply increases,equilibrium price remains constant. 
C) Graph (3): As demand increases,equilibrium quantity remains constant. 
D) Graph (4): As supply increases,equilibrium quantity increases.

Question 12

A price floor set above the equilibrium price will

Accepted Answer

A) clear the market for the good. 
B) result in a shortage of the good. 
C) result in a surplus of the good. 
D) force some firms in this industry to go out of business. 
A) clear the market for the good. 
B) result in a shortage of the good. 
C) result in a surplus of the good. 
D) force some firms in this industry to go out of business.

Question 13

A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to

Accepted Answer

A) clear the market for unskilled workers. 
B) increase the number of unskilled workers employed. 
C) increase the number of firms in those industries where the law is effective. 
D) reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers. 
E) all of the above 
A) clear the market for unskilled workers. 
B) increase the number of unskilled workers employed. 
C) increase the number of firms in those industries where the law is effective. 
D) reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers. 
E) all of the above

Question 14

If the relative price of one unit of good Y is 0.25 units of good Z,then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

Accepted Answer

A) $4,000;$2,000 
B) $1,000;$2,000 
C) $2,000;$1,000 
D) a and c 
E) none of the above 
A) $4,000;$2,000 
B) $1,000;$2,000 
C) $2,000;$1,000 
D) a and c 
E) none of the above

Question 15

There are two goods in the economy,apples and bread.The relative price of apples has increased.This could be due to

Accepted Answer

A) an increase in the absolute price of apples,ceteris paribus. 
B) a decrease in the absolute price of bread,ceteris paribus. 
C) a decrease in the absolute price of apples,ceteris paribus. 
D) an increase in the absolute price of bread,ceteris paribus. 
E) a and b 
A) an increase in the absolute price of apples,ceteris paribus. 
B) a decrease in the absolute price of bread,ceteris paribus. 
C) a decrease in the absolute price of apples,ceteris paribus. 
D) an increase in the absolute price of bread,ceteris paribus. 
E) a and b

Question 16

Exhibit 4-8  
-Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the total surplus will equal

Accepted Answer

A) area 1 + 2 + 3 + 4 + 5 
B) area 1 + 2 + 3 
C) area 2 + 3 + 4 + 5 
D) area 4 + 5 
A) area 1 + 2 + 3 + 4 + 5 
B) area 1 + 2 + 3 
C) area 2 + 3 + 4 + 5 
D) area 4 + 5

Question 17

Exhibit 4-1  
-Refer to Exhibit 4-1.The number of units exchanged at the price ceiling is

Accepted Answer

A) 75. 
B) 125. 
C) 175. 
D) 100. 
A) 75. 
B) 125. 
C) 175. 
D) 100.

Question 18

Exhibit 4-8  
-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What has happened to the producers' surplus as a result of the imposition of the price floor?

Accepted Answer

A) Producers' surplus has risen by (area 2 + 3) 
B) Producers' surplus has fallen by (area 4 + 5) 
C) Producers' surplus has changed by (area 3 - area 5) 
D) Producers' surplus has changed by (area 2 - area 5) 
A) Producers' surplus has risen by (area 2 + 3) 
B) Producers' surplus has fallen by (area 4 + 5) 
C) Producers' surplus has changed by (area 3 - area 5) 
D) Producers' surplus has changed by (area 2 - area 5)

Question 19

One of the effects of a price floor (set above equilibrium price)is

Accepted Answer

A) a surplus. 
B) higher-quality goods are produced. 
C) more satisfied customers. 
D) all of the above 
E) none of the above 
A) a surplus. 
B) higher-quality goods are produced. 
C) more satisfied customers. 
D) all of the above 
E) none of the above

Question 20

Exhibit 4-1  
-Refer to Exhibit 4-1.In a free market,________ units of the good would be exchanged.With a price ceiling,_______ units of the good would be exchanged.

Accepted Answer

A) 125;75 
B) 75;125 
C) 175;125 
D) 125;175 
A) 125;75 
B) 75;125 
C) 175;125 
D) 125;175

Exam 4: Prices: Free, controlled, and Relative

The need for a rationing device results from scarcity.

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

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

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

Someone says,"Even though the equilibrium wage rate is $8 an hour in the unskilled labor market,if we impose a minimum wage of $10 an hour,no one currently working will lose his or her job." This person must believe that the

It is possible for the absolute price of a good to rise at the same time that the good's relative price is falling.

Exhibit 4-7 -Refer to Exhibit 4-7.The number of unskilled workers who want to work at the minimum wage is

Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the producers' surplus at PF?

If goods are not rationed according to price,if follows that

The minimum wage is an example of a

Exhibit 4-4 -Refer to Exhibit 4-4.Which of the following statements is false?

A price floor set above the equilibrium price will

A minimum wage law (that sets the minimum wage above the equilibrium wage)can be expected to

If the relative price of one unit of good Y is 0.25 units of good Z,then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

There are two goods in the economy,apples and bread.The relative price of apples has increased.This could be due to

Exhibit 4-8 -Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the total surplus will equal

Exhibit 4-1 -Refer to Exhibit 4-1.The number of units exchanged at the price ceiling is

Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What has happened to the producers' surplus as a result of the imposition of the price floor?

One of the effects of a price floor (set above equilibrium price)is

Exhibit 4-1 -Refer to Exhibit 4-1.In a free market,________ units of the good would be exchanged.With a price ceiling,_______ units of the good would be exchanged.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self-Regulating Economy

Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

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

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

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

Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at P_F.What is the size of the producers' surplus at P_F?

If the relative price of one unit of good Y is 0.25 units of good Z,then it follows that the absolute price of good Z can be and the absolute price of good Y can be .

Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at P_F.What has happened to the producers' surplus as a result of the imposition of the price floor?

Exhibit 4-1 -Refer to Exhibit 4-1.In a free market,__ units of the good would be exchanged.With a price ceiling,_ units of the good would be exchanged.