Question 1

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 2

Exhibit 4-7  
-Refer to Exhibit 4-7.How many unskilled workers do firms want to employ at the minimum wage?

Accepted Answer

A) N2 
B) N1 
C) N3 
D) N1 + N3 
A) N2 
B) N1 
C) N3 
D) N1 + N3

Question 3

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 4

In 1973 and 1979,the U.S.federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Accepted Answer

A) True 
 B)False

Question 5

List and describe the two major jobs performed by price.

Accepted Answer

Prices serve as: (1)a rationing device a

Question 6

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 change in the total surplus at the price floor,compared to at the equilibrium price?

Accepted Answer

A) There was a gain in total surplus equal to (area 1 + 2 + 3) 
B) There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) 
C) There was a loss in total surplus equal to (area 4 + 5) 
D) There was a loss in total surplus equal to (area 4 + 5 + 6 ) 
A) There was a gain in total surplus equal to (area 1 + 2 + 3) 
B) There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) 
C) There was a loss in total surplus equal to (area 4 + 5) 
D) There was a loss in total surplus equal to (area 4 + 5 + 6 )

Question 7

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

Accepted Answer

A) minimum wage will create a surplus of unskilled labor. 
B) minimum wage will create a shortage of unskilled labor. 
C) minimum wage will not impact the unskilled labor market. 
D) unskilled labor market will change,but we cannot be certain how. 
A) minimum wage will create a surplus of unskilled labor. 
B) minimum wage will create a shortage of unskilled labor. 
C) minimum wage will not impact the unskilled labor market. 
D) unskilled labor market will change,but we cannot be certain how.

Question 8

Exhibit 4-5  
-Refer to Exhibit 4-5.Suppose the government imposes a price ceiling at P = $0 for transplanted kidneys.The result will be a

Accepted Answer

A) shortage of kidneys equal to (Q3 - Q1). 
B) surplus of kidneys equal to (Q3 - Q1). 
C) shortage of kidneys equal to (Q2 - Q1). 
D) surplus of kidneys equal to (Q2 - Q1). 
A) shortage of kidneys equal to (Q3 - Q1). 
B) surplus of kidneys equal to (Q3 - Q1). 
C) shortage of kidneys equal to (Q2 - Q1). 
D) surplus of kidneys equal to (Q2 - Q1).

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

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 11

If the price of good X is $50 and the price of good Y is $25,it follows that the relative price of one unit of good X is _____________ unit(s)of good Y.

Accepted Answer

A) 1.00 
B) 2.00 
C) 0.75 
D) 1.33 
E) 0.50 
A) 1.00 
B) 2.00 
C) 0.75 
D) 1.33 
E) 0.50

Question 12

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Accepted Answer

In order for a price floor to

Question 13

Exhibit 4-3  
-Refer to Exhibit 4-3.If P1 is a price ceiling,the highest price for good Y,which is tied (a tie-in sale)to good X,is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P3 - P1. 
E) P1 + P2. 
A) P1. 
B) P2. 
C) P3. 
D) P3 - P1. 
E) P1 + P2.

Question 14

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.How many fewer units of wheat will be sold at the price floor than at the equilibrium price?

Accepted Answer

A) Q2 - Q1 
B) Q3 - Q2 
C) Q3 - Q1 
D) Q2 
A) Q2 - Q1 
B) Q3 - Q2 
C) Q3 - Q1 
D) Q2

Question 15

Suppose the government sets a price floor that is above the equilibrium price for a given good.It can be said that at the price floor,

Accepted Answer

A) although sellers are selling all of the product that they desire at this price,the consumers are not able to buy all that they desire. 
B) although consumers are purchasing all of the product that they desire at this price,the sellers are not selling all that they desire. 
C) both sellers and buyers are satisfied with the quantity that is being exchanged. 
D) both sellers and buyers are exchanging the equilibrium quantity of this good. 
E) b and d 
A) although sellers are selling all of the product that they desire at this price,the consumers are not able to buy all that they desire. 
B) although consumers are purchasing all of the product that they desire at this price,the sellers are not selling all that they desire. 
C) both sellers and buyers are satisfied with the quantity that is being exchanged. 
D) both sellers and buyers are exchanging the equilibrium quantity of this good. 
E) b and d

Question 16

If the minimum wage law sets a wage floor below the equilibrium wage in the market for unskilled labor,then the

Accepted Answer

A) minimum wage will create a surplus of unskilled labor. 
B) minimum wage will create a shortage of unskilled labor. 
C) minimum wage will not impact the unskilled labor market. 
D) unskilled labor market will change,but we cannot be certain how. 
A) minimum wage will create a surplus of unskilled labor. 
B) minimum wage will create a shortage of unskilled labor. 
C) minimum wage will not impact the unskilled labor market. 
D) unskilled labor market will change,but we cannot be certain how.

Question 17

Exhibit 4-1  
-Refer to Exhibit 4-1.Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

Accepted Answer

A) $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others. 
B) they think it is only fair for sellers to receive higher prices. 
C) they want to increase their chances of buying a good for which there is a shortage. 
D) it is customary to pay more than the price ceiling. 
A) $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others. 
B) they think it is only fair for sellers to receive higher prices. 
C) they want to increase their chances of buying a good for which there is a shortage. 
D) it is customary to pay more than the price ceiling.

Question 18

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound.If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _______________ and the relative price of 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 19

A price floor (set above the equilibrium price)on rice will

Accepted Answer

A) force otherwise profitable farmers out of business. 
B) result in a shortage of rice. 
C) result in a surplus of rice. 
D) clear the market for rice. 
E) both a and b 
A) force otherwise profitable farmers out of business. 
B) result in a shortage of rice. 
C) result in a surplus of rice. 
D) clear the market for rice. 
E) both a and b

Question 20

Which of the following is false?

Accepted Answer

A) When the U.S.government imposed price ceilings on gasoline,the result was a surplus of gasoline. 
B) When the U.S.government imposed price ceilings on gasoline,the result was a shortage of gasoline. 
C) If a price ceiling is imposed below the equilibrium price in a given market,the result is a shortage in that market. 
D) First-come-first-served is a commonly used rationing device. 
A) When the U.S.government imposed price ceilings on gasoline,the result was a surplus of gasoline. 
B) When the U.S.government imposed price ceilings on gasoline,the result was a shortage of gasoline. 
C) If a price ceiling is imposed below the equilibrium price in a given market,the result is a shortage in that market. 
D) First-come-first-served is a commonly used rationing device.

Exam 4: Prices: Free, controlled, and Relative

A price ceiling is a government-mandated

Exhibit 4-7 -Refer to Exhibit 4-7.How many unskilled workers do firms want to employ at the minimum wage?

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

In 1973 and 1979,the U.S.federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

List and describe the two major jobs performed by price.

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 change in the total surplus at the price floor,compared to at the equilibrium price?

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

Exhibit 4-5 -Refer to Exhibit 4-5.Suppose the government imposes a price ceiling at P = $0 for transplanted kidneys.The result will be a

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.

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.

If the price of good X is $50 and the price of good Y is $25,it follows that the relative price of one unit of good X is _____________ unit(s)of good Y.

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Exhibit 4-3 -Refer to Exhibit 4-3.If P1 is a price ceiling,the highest price for good Y,which is tied (a tie-in sale)to good X,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.How many fewer units of wheat will be sold at the price floor than at the equilibrium price?

Suppose the government sets a price floor that is above the equilibrium price for a given good.It can be said that at the price floor,

If the minimum wage law sets a wage floor below the equilibrium wage in the market for unskilled labor,then the

Exhibit 4-1 -Refer to Exhibit 4-1.Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound.If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _______________ and the relative price of butter has _______________.

A price floor (set above the equilibrium price)on rice will

Which of the following is false?

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 4-8 -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 change in the total surplus at the price floor,compared to at the equilibrium price?

Exhibit 4-3 -Refer to Exhibit 4-3.If P₁ is a price ceiling,the highest price for good Y,which is tied (a tie-in sale)to good X,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 P_F.How many fewer units of wheat will be sold at the price floor than at the equilibrium price?

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound.If the price of butter rises to $3.90 and the price of margarine rises to $2.20,then the absolute price of butter has _ and the relative price of butter has _.