Question 1

Exhibit 4-6  
-Refer to Exhibit 4-6.Suppose the minimum wage is set at $7.The result will be

Accepted Answer

A) a surplus of unskilled workers. 
B) a shortage of unskilled workers. 
C) no effect on the market for unskilled labor. 
D) none of the above 
A) a surplus of unskilled workers. 
B) a shortage of unskilled workers. 
C) no effect on the market for unskilled labor. 
D) none of the above

Question 2

Exhibit 4-3  
-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

Question 3

Suppose you live in New York City and the government has imposed price ceilings on apartment rental rates.You want to rent an apartment from Smith,who says that unless you buy the furniture in the apartment for $4,000,he cannot rent the apartment to you.The condition of buying the furniture could be considered

Accepted Answer

A) a price ceiling. 
B) a price floor. 
C) a tie-in sale. 
D) to be something no renter would agree to. 
E) c and d 
A) a price ceiling. 
B) a price floor. 
C) a tie-in sale. 
D) to be something no renter would agree to. 
E) c and d

Question 4

If the current market price of good Z is below the equilibrium price of good Z

Accepted Answer

A) it must be because the government has imposed a price ceiling in the market for good Z. 
B) there is a shortage of good Z. 
C) there is a surplus of good Z. 
D) demand must necessarily decrease to restore equilibrium. 
E) a and b 
A) it must be because the government has imposed a price ceiling in the market for good Z. 
B) there is a shortage of good Z. 
C) there is a surplus of good Z. 
D) demand must necessarily decrease to restore equilibrium. 
E) a and b

Question 5

Exhibit 4-3  
-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 6

Suppose the government imposes a price ceiling above the equilibrium price of a given good.Which of the following is the most likely result?

Accepted Answer

A) Some other rationing device will emerge to allocate the good among buyers. 
B) Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling. 
C) No change will occur in the market. 
D) Brute force will be used to allocate the good among buyers. 
E) a,b,and d 
A) Some other rationing device will emerge to allocate the good among buyers. 
B) Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling. 
C) No change will occur in the market. 
D) Brute force will be used to allocate the good among buyers. 
E) a,b,and d

Question 7

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 8

If the minimum wage is set above the equilibrium wage,then

Accepted Answer

A) more people will work than at the equilibrium wage. 
B) the same number of people will work as at the equilibrium wage. 
C) fewer people will want to work than at the equilibrium wage. 
D) there will be fewer labor hours purchased by employers than at the equilibrium wage. 
E) none of the above 
A) more people will work than at the equilibrium wage. 
B) the same number of people will work as at the equilibrium wage. 
C) fewer people will want to work than at the equilibrium wage. 
D) there will be fewer labor hours purchased by employers than at the equilibrium wage. 
E) none of the above

Question 9

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 total surplus at PF?

Accepted Answer

A) area 1 + 2 + 3 
B) area 1 + 2 + 3 + 4 
C) area 1 + 2 + 3 + 4 + 5 
D) area 1 + 2 + 3 + 4 + 5 + 6 
A) area 1 + 2 + 3 
B) area 1 + 2 + 3 + 4 
C) area 1 + 2 + 3 + 4 + 5 
D) area 1 + 2 + 3 + 4 + 5 + 6

Question 10

Exhibit 4-5  
-Refer to Exhibit 4-5.If a free market were allowed in the transplanted kidney market,then the equilibrium price would be P2.The number of kidneys transplanted would increase by _________ compared to the number transplanted at a price ceiling of P= $0.

Accepted Answer

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

Question 11

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market.Give a hypothetical numerical example to help support your answer.

Accepted Answer

In order for a price ceiling to have an

Question 12

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 13

Buyers always prefer lower prices to higher prices.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) Graph (1): There is a shortage when price is P3. 
B) Graph (2): As supply increases,equilibrium quantity remains constant. 
C) Graph (3): As demand increases,equilibrium price remains constant. 
D) Graph (4): As supply changes,equilibrium price stays the same. 
A) Graph (1): There is a shortage when price is P3. 
B) Graph (2): As supply increases,equilibrium quantity remains constant. 
C) Graph (3): As demand increases,equilibrium price remains constant. 
D) Graph (4): As supply changes,equilibrium price stays the same.

Question 15

Which of the following is true?

Accepted Answer

A) Buyers always prefer lower prices to higher prices. 
B) Buyers never prefer lower prices to higher prices. 
C) Buyers rarely prefer lower prices to higher prices. 
D) Buyers prefer lower prices to higher prices,ceteris paribus. 
A) Buyers always prefer lower prices to higher prices. 
B) Buyers never prefer lower prices to higher prices. 
C) Buyers rarely prefer lower prices to higher prices. 
D) Buyers prefer lower prices to higher prices,ceteris paribus.

Question 16

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

Accepted Answer

A) True 
 B)False

Question 17

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 consumers' surplus as a result of the imposition of the price floor?

Accepted Answer

A) consumers' surplus has gone down by (area 2 + 4) 
B) consumers' surplus has risen by (area 2 + 4) 
C) consumers' surplus has gone down by (area 3 - area 5) 
D) consumers' surplus has risen by (area 2 + 3) 
A) consumers' surplus has gone down by (area 2 + 4) 
B) consumers' surplus has risen by (area 2 + 4) 
C) consumers' surplus has gone down by (area 3 - area 5) 
D) consumers' surplus has risen by (area 2 + 3)

Question 18

In the market for a given product,when a price floor is set above the equilibrium price the result will be

Accepted Answer

A) more exchanges made in the market. 
B) an increase in the supply of the product. 
C) a decrease in the demand for the product. 
D) a deadweight loss. 
A) more exchanges made in the market. 
B) an increase in the supply of the product. 
C) a decrease in the demand for the product. 
D) a deadweight loss.

Question 19

When the price of a good rises,the price is transmitting information indicating that the good has become relatively

Accepted Answer

A) scarcer. 
B) less scarce. 
C) more plentiful in supply. 
D) b and c 
A) scarcer. 
B) less scarce. 
C) more plentiful in supply. 
D) b and c

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 4: Prices: Free, controlled, and Relative

Exhibit 4-6 -Refer to Exhibit 4-6.Suppose the minimum wage is set at $7.The result will be

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

If the current market price of good Z is below the equilibrium price of good Z

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

Suppose the government imposes a price ceiling above the equilibrium price of a given good.Which of the following is the most likely result?

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.

If the minimum wage is set above the equilibrium wage,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 PF.What is the size of the total surplus at PF?

Exhibit 4-5 -Refer to Exhibit 4-5.If a free market were allowed in the transplanted kidney market,then the equilibrium price would be P2.The number of kidneys transplanted would increase by _________ compared to the number transplanted at a price ceiling of P= $0.

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market.Give a hypothetical numerical example to help support your answer.

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

Buyers always prefer lower prices to higher prices.

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

Which of the following is true?

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

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 consumers' surplus as a result of the imposition of the price floor?

In the market for a given product,when a price floor is set above the equilibrium price the result will be

When the price of a good rises,the price is transmitting information indicating that the good has become relatively

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

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 P₃ is a price ceiling,then

Exhibit 4-3 -Refer to Exhibit 4-3.If price P₁ is a price ceiling,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 total surplus at P_F?

Exhibit 4-5 -Refer to Exhibit 4-5.If a free market were allowed in the transplanted kidney market,then the equilibrium price would be P₂.The number of kidneys transplanted would increase by _________ compared to the number transplanted at a price ceiling of P= $0.

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 consumers' surplus as a result of the imposition of the price floor?