Question 1

When the maximum price that can be legally charged is above the market price we say that there is a price floor.

Accepted Answer

A) True 
 B)False

Question 2

If a seller facing excess demand is unable to raise the price of the good due to a price ceiling,the seller might:

Accepted Answer

A)  increase the quantity supplied of the product. 
B)  decrease the price of the product. 
C)  increase the quality of the product. 
D)  decrease the level of service for that product. 
A)  increase the quantity supplied of the product. 
B)  decrease the price of the product. 
C)  increase the quality of the product. 
D)  decrease the level of service for that product.

Question 3

Ultimately,repealing the price controls on gasoline and oil:

Accepted Answer

A)  led to permanently higher gasoline prices. 
B)  led to a higher supply of gasoline and lower prices. 
C)  was disastrous since the market collapsed due to a lack of government regulation. 
D)  was not able to eliminate the shortages of gasoline in the United States. 
A)  led to permanently higher gasoline prices. 
B)  led to a higher supply of gasoline and lower prices. 
C)  was disastrous since the market collapsed due to a lack of government regulation. 
D)  was not able to eliminate the shortages of gasoline in the United States.

Question 4

A market with price ceilings fails to maximize all of the following EXCEPT:

Accepted Answer

A)  the gains from trade. 
B)  consumer surplus. 
C)  excess supply. 
D)  producer surplus. 
A)  the gains from trade. 
B)  consumer surplus. 
C)  excess supply. 
D)  producer surplus.

Question 5

An alternative to rent control that has been used in some cities since the 1990s is:

Accepted Answer

A)  confiscation of property from landlords. 
B)  policies that prevent evictions. 
C)  rent regulation that limits the rate of increase in rent. 
D)  higher taxes on rental income of landlords. 
A)  confiscation of property from landlords. 
B)  policies that prevent evictions. 
C)  rent regulation that limits the rate of increase in rent. 
D)  higher taxes on rental income of landlords.

Question 6

What is blat?

Accepted Answer

A)  a long line 
B)  the time costs associated with buying price-controlled goods 
C)  the use of political connections to get favors 
D)  a dilapidated rent-controlled apartment. 
A)  a long line 
B)  the time costs associated with buying price-controlled goods 
C)  the use of political connections to get favors 
D)  a dilapidated rent-controlled apartment.

Question 7

Use the following to answer questions 
Figure: Water Market  
-Price ceilings:

Accepted Answer

A)  increase the gains from trade because lower prices encourage consumers to buy more. 
B)  reduce the size of the market,shrinking both consumer and producer surplus. 
C)  help reduce the deadweight losses owing to taxation. 
D)  increase market output to the point where consumer surplus equals producer surplus. 
A)  increase the gains from trade because lower prices encourage consumers to buy more. 
B)  reduce the size of the market,shrinking both consumer and producer surplus. 
C)  help reduce the deadweight losses owing to taxation. 
D)  increase market output to the point where consumer surplus equals producer surplus.

Question 8

If there are 100 tickets to a concert and 200 fans who would like to go to the concert,each placing a slightly different value on the tickets,is it more efficient to hold an auction for the tickets or to hold a random drawing for the tickets?

Accepted Answer

A)  hold an auction 
B)  hold a random drawing 
C)  Both are equally efficient. 
D)  It is impossible to say which is more efficient. 
A)  hold an auction 
B)  hold a random drawing 
C)  Both are equally efficient. 
D)  It is impossible to say which is more efficient.

Question 9

Most economists favor price controls as a way of allocating resources.

Accepted Answer

A) True 
 B)False

Question 10

If quantity supplied equals 80 units and quantity demanded equals 85 units under a price control,then it is a:

Accepted Answer

A)  binding price ceiling. 
B)  binding price floor. 
C)  nonbinding price ceiling. 
D)  nonbinding price floor. 
A)  binding price ceiling. 
B)  binding price floor. 
C)  nonbinding price ceiling. 
D)  nonbinding price floor.

Question 11

If an American teenager will work for $5 an hour and an employer is willing to pay that wage,but the minimum wage is $7.25 an hour and the employer is not willing to pay that much,the teenager goes unemployed and the market experiences:

Accepted Answer

A)  lost gains from trade. 
B)  wasteful increases in quality. 
C)  resource misallocations. 
D)  reductions in product quality. 
A)  lost gains from trade. 
B)  wasteful increases in quality. 
C)  resource misallocations. 
D)  reductions in product quality.

Question 12

Which of the following best represents the misallocation of resources that would occur under a price ceiling on bottled water following a major hurricane?

Accepted Answer

A)  Bottles of water sit on the shelves because nobody can afford it. 
B)  A family in a distant state takes time off work to bring bottled water to the hurricane-ravaged area. 
C)  A family in a distant state gives bottled water to its dog,but a family in the hurricane area cannot find bottled water to drink. 
D)  Families in the hurricane area brush their teeth with bottled water but cannot find enough to drink. 
A)  Bottles of water sit on the shelves because nobody can afford it. 
B)  A family in a distant state takes time off work to bring bottled water to the hurricane-ravaged area. 
C)  A family in a distant state gives bottled water to its dog,but a family in the hurricane area cannot find bottled water to drink. 
D)  Families in the hurricane area brush their teeth with bottled water but cannot find enough to drink.

Question 13

An increase in the minimum wage would likely increase unemployment among which group of workers?

Accepted Answer

A)  college graduates 
B)  unskilled workers 
C)  female workers 
D)  older workers 
A)  college graduates 
B)  unskilled workers 
C)  female workers 
D)  older workers

Question 14

A nonbinding price ceiling leads to a(n):

Accepted Answer

A)  shortage. 
B)  surplus. 
C)  equilibrium quantity. 
D)  quantity of zero units. 
A)  shortage. 
B)  surplus. 
C)  equilibrium quantity. 
D)  quantity of zero units.

Question 15

Price controls are usually imposed in response to an:

Accepted Answer

A)  expected increase in prices. 
B)  expected decrease in prices. 
C)  unexpected increase in prices. 
D)  unexpected decrease in prices. 
A)  expected increase in prices. 
B)  expected decrease in prices. 
C)  unexpected increase in prices. 
D)  unexpected decrease in prices.

Question 16

Use the following to answer questions
Figure: Price Ceiling  
-(Figure: Price Ceiling)Refer to the figure.When a price ceiling of $10 is instituted by the government,consumers are able to buy how many units of the product?

Accepted Answer

A)  290 units 
B)  310 units 
C)  270 units 
D)  40 units 
A)  290 units 
B)  310 units 
C)  270 units 
D)  40 units

Question 17

Use the following to answer questions 
Figure: Price Ceilings and Consumer Valuation  
-(Figure: Price Ceilings and Consumer Valuation)Refer to the figure.Suppose a price ceiling of $3 goes into effect.What is the loss of consumer surplus due to the random allocation of price-controlled goods compared to the allocation only to the highest-value users?

Accepted Answer

A)  $90 
B)  $60 
C)  $150 
D)  $30 
A)  $90 
B)  $60 
C)  $150 
D)  $30

Question 18

The statement that "price controls do not eliminate competition":

Accepted Answer

A)  is false because price controls prevent rich consumers from outbidding poor consumers for goods and services. 
B)  is false because firms are no longer allowed to exploit consumers by charging higher prices after hurricanes or major snowstorms. 
C)  reflects the idea that consumers will compete for price-controlled products by waiting in line and offering bribes to sellers. 
D)  means that sellers will increase the quality of their product when they cannot legally increase their prices. 
A)  is false because price controls prevent rich consumers from outbidding poor consumers for goods and services. 
B)  is false because firms are no longer allowed to exploit consumers by charging higher prices after hurricanes or major snowstorms. 
C)  reflects the idea that consumers will compete for price-controlled products by waiting in line and offering bribes to sellers. 
D)  means that sellers will increase the quality of their product when they cannot legally increase their prices.

Question 19

We commonly associate ______ with agricultural products.

Accepted Answer

A)  price ceilings 
B)  price floors 
C)  unregulated markets 
D)  rent control 
A)  price ceilings 
B)  price floors 
C)  unregulated markets 
D)  rent control

Question 20

When a price ceiling is in effect:

Accepted Answer

A)  suppliers get too strong a signal from demanders about their needs. 
B)  demanders have no incentive to signal their needs to suppliers. 
C)  all of demanders' needs are met at the lower price,so there is no need to signal anything to suppliers. 
D)  demanders cannot signal their needs to suppliers. 
A)  suppliers get too strong a signal from demanders about their needs. 
B)  demanders have no incentive to signal their needs to suppliers. 
C)  all of demanders' needs are met at the lower price,so there is no need to signal anything to suppliers. 
D)  demanders cannot signal their needs to suppliers.

When the maximum price that can be legally charged is above the market price we say that there is a price floor.

If a seller facing excess demand is unable to raise the price of the good due to a price ceiling,the seller might:

Ultimately,repealing the price controls on gasoline and oil:

A market with price ceilings fails to maximize all of the following EXCEPT:

An alternative to rent control that has been used in some cities since the 1990s is:

What is blat?

Use the following to answer questions Figure: Water Market -Price ceilings:

If there are 100 tickets to a concert and 200 fans who would like to go to the concert,each placing a slightly different value on the tickets,is it more efficient to hold an auction for the tickets or to hold a random drawing for the tickets?

Most economists favor price controls as a way of allocating resources.

If quantity supplied equals 80 units and quantity demanded equals 85 units under a price control,then it is a:

If an American teenager will work for $5 an hour and an employer is willing to pay that wage,but the minimum wage is $7.25 an hour and the employer is not willing to pay that much,the teenager goes unemployed and the market experiences:

Which of the following best represents the misallocation of resources that would occur under a price ceiling on bottled water following a major hurricane?

An increase in the minimum wage would likely increase unemployment among which group of workers?

A nonbinding price ceiling leads to a(n):

Price controls are usually imposed in response to an:

Use the following to answer questions Figure: Price Ceiling -(Figure: Price Ceiling)Refer to the figure.When a price ceiling of $10 is instituted by the government,consumers are able to buy how many units of the product?

The statement that "price controls do not eliminate competition":

We commonly associate ______ with agricultural products.

When a price ceiling is in effect:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 5: Price Ceilings and Floors

When the maximum price that can be legally charged is above the market price we say that there is a price floor.

If a seller facing excess demand is unable to raise the price of the good due to a price ceiling,the seller might:

Ultimately,repealing the price controls on gasoline and oil:

A market with price ceilings fails to maximize all of the following EXCEPT:

An alternative to rent control that has been used in some cities since the 1990s is:

What is blat?

Use the following to answer questions Figure: Water Market -Price ceilings:

If there are 100 tickets to a concert and 200 fans who would like to go to the concert,each placing a slightly different value on the tickets,is it more efficient to hold an auction for the tickets or to hold a random drawing for the tickets?

Most economists favor price controls as a way of allocating resources.

If quantity supplied equals 80 units and quantity demanded equals 85 units under a price control,then it is a:

If an American teenager will work for $5 an hour and an employer is willing to pay that wage,but the minimum wage is $7.25 an hour and the employer is not willing to pay that much,the teenager goes unemployed and the market experiences:

Which of the following best represents the misallocation of resources that would occur under a price ceiling on bottled water following a major hurricane?

An increase in the minimum wage would likely increase unemployment among which group of workers?

A nonbinding price ceiling leads to a(n):

Price controls are usually imposed in response to an:

Use the following to answer questions Figure: Price Ceiling -(Figure: Price Ceiling)Refer to the figure.When a price ceiling of $10 is instituted by the government,consumers are able to buy how many units of the product?

The statement that "price controls do not eliminate competition":

We commonly associate ______ with agricultural products.

When a price ceiling is in effect:

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters