Question 1

Which of the following is not correct?

Accepted Answer

A) The economy contains many labor markets for different types of workers. 
B) The impact of the minimum wage depends on the skill and experience of the worker. 
C) The minimum wage is binding for workers with high skills and much experience. 
D) The minimum wage is not binding when the equilibrium wage is above the minimum wage. 
A) The economy contains many labor markets for different types of workers. 
B) The impact of the minimum wage depends on the skill and experience of the worker. 
C) The minimum wage is binding for workers with high skills and much experience. 
D) The minimum wage is not binding when the equilibrium wage is above the minimum wage.

Question 2

Figure 6-4  
-Refer to Figure 6-4.A government-imposed price of $6 in this market could be an example of a
(i)Binding price ceiling.
(ii)Non-binding price ceiling.
(iii)Binding price floor.
(iv)Non-binding price floor.

Accepted Answer

A) (i)only 
B) (ii)only 
C) (i)and (iv)only 
D) (ii)and (iii)only 
A) (i)only 
B) (ii)only 
C) (i)and (iv)only 
D) (ii)and (iii)only

Question 3

Figure 6-1
 
-Refer to Figure 6-1.The price ceiling shown in panel (a)

Accepted Answer

A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a)and b)are correct. 
A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a)and b)are correct.

Question 4

When OPEC raised the price of crude oil in the 1970s,it caused the

Accepted Answer

A) supply of gasoline to decrease. 
B) quantity of gasoline demanded to decrease. 
C) equilibrium price of gasoline to increase. 
D) All of the above are correct. 
A) supply of gasoline to decrease. 
B) quantity of gasoline demanded to decrease. 
C) equilibrium price of gasoline to increase. 
D) All of the above are correct.

Question 5

Figure 6-4  
-Refer to Figure 6-4.A government-imposed price floor of $12 in this market results in

Accepted Answer

A) a surplus of 2 units. 
B) a surplus of 4 units. 
C) 12 units sold. 
D) 10 units sold. 
A) a surplus of 2 units. 
B) a surplus of 4 units. 
C) 12 units sold. 
D) 10 units sold.

Question 6

If a price ceiling is not binding,then

Accepted Answer

A) there will be a surplus in the market. 
B) there will be a shortage in the market. 
C) the market will be less efficient than it would be without the price ceiling. 
D) there will be no effect on the market price or quantity sold. 
A) there will be a surplus in the market. 
B) there will be a shortage in the market. 
C) the market will be less efficient than it would be without the price ceiling. 
D) there will be no effect on the market price or quantity sold.

Question 7

Long lines

Accepted Answer

A) and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B) and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C) are an inefficient rationing mechanism because they waste buyers' time,and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D) are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly,and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A) and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B) and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C) are an inefficient rationing mechanism because they waste buyers' time,and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D) are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly,and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 8

After OPEC raised the price of crude oil in the 1970's,which of the following was the most important reason that there were shortages of gasoline?

Accepted Answer

A) ​Americans drove large,gas-guzzling vehicles. 
B) ​The increase in the price of crude oil by OPEC. 
C) ​The effects of a price ceiling on gasoline prices imposed by the US government. 
D) ​Increased commuting times resulting from traffic congestion. 
A) ​Americans drove large,gas-guzzling vehicles. 
B) ​The increase in the price of crude oil by OPEC. 
C) ​The effects of a price ceiling on gasoline prices imposed by the US government. 
D) ​Increased commuting times resulting from traffic congestion.

Question 9

Figure 6-7  
-Refer to Figure 6-7.Suppose a price floor of $8 is imposed on this market.As a result,

Accepted Answer

A) buyers' total expenditure on the good decreases by $20. 
B) the supply curve shifts to the left;quantity sold is now 30 units and the price is $8. 
C) the quantity of the good demanded decreases by 10 units. 
D) the price of the good continues to serve as the rationing mechanism. 
A) buyers' total expenditure on the good decreases by $20. 
B) the supply curve shifts to the left;quantity sold is now 30 units and the price is $8. 
C) the quantity of the good demanded decreases by 10 units. 
D) the price of the good continues to serve as the rationing mechanism.

Question 10

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Accepted Answer

A) a smaller quantity of the good is bought and sold. 
B) a smaller quantity of the good is demanded. 
C) a larger quantity of the good is supplied. 
D) the price rises above the previous equilibrium. 
A) a smaller quantity of the good is bought and sold. 
B) a smaller quantity of the good is demanded. 
C) a larger quantity of the good is supplied. 
D) the price rises above the previous equilibrium.

Question 11

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A) less than one-third. 
B) between one-third and one-half. 
C) between one-half and two-thirds. 
D) greater than two-thirds. 
A) less than one-third. 
B) between one-third and one-half. 
C) between one-half and two-thirds. 
D) greater than two-thirds.

Question 12

Figure 6-5  
-Refer to Figure 6-5.If the solid horizontal line on the graph represents a price ceiling,then the price ceiling is

Accepted Answer

A) binding and creates a surplus of 60 units of the good. 
B) binding and creates a surplus of 20 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding,and there will be no surplus or shortage of the good. 
A) binding and creates a surplus of 60 units of the good. 
B) binding and creates a surplus of 20 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding,and there will be no surplus or shortage of the good.

Question 13

When a binding price ceiling is imposed on a market,

Accepted Answer

A) price no longer serves as a rationing device. 
B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C) all buyers benefit. 
D) All of the above are correct. 
A) price no longer serves as a rationing device. 
B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C) all buyers benefit. 
D) All of the above are correct.

Question 14

A shortage results when a

Accepted Answer

A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market. 
A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market.

Question 15

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13.Which of the following statements is not correct?

Accepted Answer

A) A price ceiling set at $4 would be binding,but a price ceiling set at $6 would not be binding. 
B) A price floor set at $7 would be binding,but a price floor set at $4 would not be binding. 
C) A price ceiling set at $3.50 would result in a surplus. 
D) A price floor set at $6.50 would result in a surplus. 
A) A price ceiling set at $4 would be binding,but a price ceiling set at $6 would not be binding. 
B) A price floor set at $7 would be binding,but a price floor set at $4 would not be binding. 
C) A price ceiling set at $3.50 would result in a surplus. 
D) A price floor set at $6.50 would result in a surplus.

Question 16

Figure 6-6  
-Refer to Figure 6-6.Which of the following statements is not correct?

Accepted Answer

A) A price ceiling set at $6 would be binding,but a price ceiling set at $12 would not be binding. 
B) A price floor set at $14 would be binding,but a price floor set at $8 would not be binding. 
C) A price ceiling set at $9 would result in a surplus. 
D) A price floor set at $6 would result in a shortage. 
A) A price ceiling set at $6 would be binding,but a price ceiling set at $12 would not be binding. 
B) A price floor set at $14 would be binding,but a price floor set at $8 would not be binding. 
C) A price ceiling set at $9 would result in a surplus. 
D) A price floor set at $6 would result in a shortage.

Question 17

The minimum wage is an example of a

Accepted Answer

A) price ceiling. 
B) price floor. 
C) wage subsidy. 
D) tax. 
A) price ceiling. 
B) price floor. 
C) wage subsidy. 
D) tax.

Question 18

Figure 6-7  
-Refer to Figure 6-7.Which of the following price controls would cause a shortage of 20 units of the good?

Accepted Answer

A) a price ceiling set at $6 
B) a price ceiling set at $5 
C) a price floor set at $9 
D) a price floor set at $8 
A) a price ceiling set at $6 
B) a price ceiling set at $5 
C) a price floor set at $9 
D) a price floor set at $8

Question 19

An example of a price floor is

Accepted Answer

A) the regulation of gasoline prices in the U.S.in the 1970s. 
B) rent control. 
C) the minimum wage. 
D) any restriction on price that leads to a shortage. 
A) the regulation of gasoline prices in the U.S.in the 1970s. 
B) rent control. 
C) the minimum wage. 
D) any restriction on price that leads to a shortage.

Question 20

The U.S.Congress first instituted a minimum wage in

Accepted Answer

A) 1776. 
B) 1812. 
C) 1938. 
D) 1975. 
A) 1776. 
B) 1812. 
C) 1938. 
D) 1975.

Exam 6: Supply Demand and Government Policies: Controls on Prices

Which of the following is not correct?

Figure 6-4 -Refer to Figure 6-4.A government-imposed price of $6 in this market could be an example of a (i)Binding price ceiling. (ii)Non-binding price ceiling. (iii)Binding price floor. (iv)Non-binding price floor.

Figure 6-1 -Refer to Figure 6-1.The price ceiling shown in panel (a)

When OPEC raised the price of crude oil in the 1970s,it caused the

Figure 6-4 -Refer to Figure 6-4.A government-imposed price floor of $12 in this market results in

If a price ceiling is not binding,then

Long lines

After OPEC raised the price of crude oil in the 1970's,which of the following was the most important reason that there were shortages of gasoline?

Figure 6-7 -Refer to Figure 6-7.Suppose a price floor of $8 is imposed on this market.As a result,

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Figure 6-5 -Refer to Figure 6-5.If the solid horizontal line on the graph represents a price ceiling,then the price ceiling is

When a binding price ceiling is imposed on a market,

A shortage results when a

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13.Which of the following statements is not correct?

Figure 6-6 -Refer to Figure 6-6.Which of the following statements is not correct?

The minimum wage is an example of a

Figure 6-7 -Refer to Figure 6-7.Which of the following price controls would cause a shortage of 20 units of the good?

An example of a price floor is

The U.S.Congress first instituted a minimum wage in

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A