Question 1

If a price ceiling is not binding,then

Accepted Answer

A) the equilibrium price is above the price ceiling. 
B) the equilibrium price is below the price ceiling. 
C) it has no legal enforcement mechanism. 
D) None of the above is correct because all price ceilings must be binding. 
A) the equilibrium price is above the price ceiling. 
B) the equilibrium price is below the price ceiling. 
C) it has no legal enforcement mechanism. 
D) None of the above is correct because all price ceilings must be binding.

Question 2

In a free,competitive market,what is the rationing mechanism?

Accepted Answer

A) seller bias 
B) buyer bias 
C) government law 
D) price 
A) seller bias 
B) buyer bias 
C) government law 
D) price

Question 3

Figure 6-9  
-Refer to Figure 6-9.At which price would a price floor be binding?

Accepted Answer

A) $7 
B) $6 
C) $4 
D) $5 
A) $7 
B) $6 
C) $4 
D) $5

Question 4

Figure 6-9  
-Refer to Figure 6-9.A price floor set at

Accepted Answer

A) $4 will be binding and will result in a shortage of 8 units. 
B) $4 will be binding and will result in a shortage of 16 units. 
C) $7 will be binding and will result in a surplus of 4 units. 
D) $7 will be binding and will result in a surplus of 8 units. 
A) $4 will be binding and will result in a shortage of 8 units. 
B) $4 will be binding and will result in a shortage of 16 units. 
C) $7 will be binding and will result in a surplus of 4 units. 
D) $7 will be binding and will result in a surplus of 8 units.

Question 5

Figure 6-12  
-Refer to Figure 6-12.When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A) the market price will increase to P3. 
B) a surplus will occur at the new market price of P2. 
C) the market price will stay at P1. 
D) a shortage will occur at the new market price of P2. 
A) the market price will increase to P3. 
B) a surplus will occur at the new market price of P2. 
C) the market price will stay at P1. 
D) a shortage will occur at the new market price of P2.

Question 6

Which of the following is not a result of rent control?

Accepted Answer

A) fewer new apartments offered for rent 
B) less maintenance provided by landlords 
C) bribery 
D) higher quality housing 
A) fewer new apartments offered for rent 
B) less maintenance provided by landlords 
C) bribery 
D) higher quality housing

Question 7

Figure 6-9  
-Refer to Figure 6-9.At which price would a price floor be nonbinding?

Accepted Answer

A) $8 
B) $7 
C) $6 
D) $9 
A) $8 
B) $7 
C) $6 
D) $9

Question 8

Figure 6-12  
-Refer to Figure 6-12.Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Accepted Answer

A) Buyers of gasoline paid a price of P1 before 1973;they paid a price of P2 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P1 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P2 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973;the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973. 
A) Buyers of gasoline paid a price of P1 before 1973;they paid a price of P2 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P1 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P2 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973;the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

Question 9

If the government removes a binding price ceiling from a market,then the price received by sellers will

Accepted Answer

A) decrease,and the quantity sold in the market will decrease. 
B) decrease,and the quantity sold in the market will increase. 
C) increase,and the quantity sold in the market will decrease. 
D) increase,and the quantity sold in the market will increase. 
A) decrease,and the quantity sold in the market will decrease. 
B) decrease,and the quantity sold in the market will increase. 
C) increase,and the quantity sold in the market will decrease. 
D) increase,and the quantity sold in the market will increase.

Question 10

In the United States,before OPEC increased the price of crude oil in 1973,there was

Accepted Answer

A) no price ceiling on gasoline. 
B) a nonbinding price ceiling on gasoline. 
C) a binding price ceiling on gasoline. 
D) a nonbinding price floor on gasoline. 
A) no price ceiling on gasoline. 
B) a nonbinding price ceiling on gasoline. 
C) a binding price ceiling on gasoline. 
D) a nonbinding price floor on gasoline.

Question 11

Which of the following is correct? Price controls

Accepted Answer

A) always help those they are designed to help. 
B) never help those they are designed to help. 
C) often hurt those they are designed to help. 
D) always hurt those they are designed to help. 
A) always help those they are designed to help. 
B) never help those they are designed to help. 
C) often hurt those they are designed to help. 
D) always hurt those they are designed to help.

Question 12

Rent control

Accepted Answer

A) is an example of a price ceiling. 
B) leads to a larger shortage of apartments in the long run than in the short run. 
C) leads to lower rents and,in the long run,to lower-quality housing. 
D) All of the above are correct. 
A) is an example of a price ceiling. 
B) leads to a larger shortage of apartments in the long run than in the short run. 
C) leads to lower rents and,in the long run,to lower-quality housing. 
D) All of the above are correct.

Question 13

Figure 6-4  
-Refer to Figure 6-4.Which of the following statements is not correct?

Accepted Answer

A) When the price is $10,quantity supplied equals quantity demanded. 
B) When the price is $6,there is a surplus of 8 units. 
C) When the price is $12,there is a surplus of 4 units. 
D) When the price is $16,quantity supplied exceeds quantity demanded by 12 units. 
A) When the price is $10,quantity supplied equals quantity demanded. 
B) When the price is $6,there is a surplus of 8 units. 
C) When the price is $12,there is a surplus of 4 units. 
D) When the price is $16,quantity supplied exceeds quantity demanded by 12 units.

Question 14

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A) an accumulation of dirt in the interior of rental cars 
B) poor engine maintenance in rental cars 
C) free gasoline given to people as an incentive to a rent a car 
D) slow replacement of old rental cars with newer ones 
A) an accumulation of dirt in the interior of rental cars 
B) poor engine maintenance in rental cars 
C) free gasoline given to people as an incentive to a rent a car 
D) slow replacement of old rental cars with newer ones

Question 15

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17.A government-imposed price of $24 in this market is an example of a

Accepted Answer

A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus. 
A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus.

Question 16

The minimum wage was instituted to ensure workers

Accepted Answer

A) a middle-class standard of living. 
B) employment. 
C) a minimally adequate standard of living. 
D) unemployment compensation. 
A) a middle-class standard of living. 
B) employment. 
C) a minimally adequate standard of living. 
D) unemployment compensation.

Question 17

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

Accepted Answer

A) demand curve for toothpaste shifts to the left. 
B) supply curve for toothpaste shifts to the right. 
C) quantity demanded of toothpaste decreases,and the quantity of toothpaste that firms want to supply increases. 
D) quantity supplied of toothpaste stays the same. 
A) demand curve for toothpaste shifts to the left. 
B) supply curve for toothpaste shifts to the right. 
C) quantity demanded of toothpaste decreases,and the quantity of toothpaste that firms want to supply increases. 
D) quantity supplied of toothpaste stays the same.

Question 18

If a nonbinding price ceiling is imposed on a market,then the

Accepted Answer

A) quantity sold in the market will decrease. 
B) quantity sold in the market will stay the same. 
C) price in the market will increase. 
D) price in the market will decrease. 
A) quantity sold in the market will decrease. 
B) quantity sold in the market will stay the same. 
C) price in the market will increase. 
D) price in the market will decrease.

Question 19

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A) an enhancement of efficiency. 
B) undesirable rationing mechanisms. 
C) a surplus. 
D) a shortage. 
A) an enhancement of efficiency. 
B) undesirable rationing mechanisms. 
C) a surplus. 
D) a shortage.

Question 20

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A) reduced rents 
B) a large shortage 
C) a small increase in quantity demanded 
D) a small decrease in quantity supplied 
A) reduced rents 
B) a large shortage 
C) a small increase in quantity demanded 
D) a small decrease in quantity supplied

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

If a price ceiling is not binding,then

In a free,competitive market,what is the rationing mechanism?

Figure 6-9 -Refer to Figure 6-9.At which price would a price floor be binding?

Figure 6-9 -Refer to Figure 6-9.A price floor set at

Figure 6-12 -Refer to Figure 6-12.When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Which of the following is not a result of rent control?

Figure 6-9 -Refer to Figure 6-9.At which price would a price floor be nonbinding?

Figure 6-12 -Refer to Figure 6-12.Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

If the government removes a binding price ceiling from a market,then the price received by sellers will

In the United States,before OPEC increased the price of crude oil in 1973,there was

Which of the following is correct? Price controls

Rent control

Figure 6-4 -Refer to Figure 6-4.Which of the following statements is not correct?

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17.A government-imposed price of $24 in this market is an example of a

The minimum wage was instituted to ensure workers

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

If a nonbinding price ceiling is imposed on a market,then the

An outcome that can result from either a price ceiling or a price floor is

Which of the following is not a short-run effect of rent control on the housing market?

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

Figure 6-12 -Refer to Figure 6-12.When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,