Question 1

Economists blame the long lines at gasoline stations in the United States during the 1970s as well as the long delays in construction projects on:

Accepted Answer

A)  consumers who bought gas too frequently. 
B)  the Organization of Petroleum Exporting Countries (OPE
C) . 
C)  major oil companies operating in the United States. 
D)  U.S.government regulation of gasoline prices. 
A)  consumers who bought gas too frequently. 
B)  the Organization of Petroleum Exporting Countries (OPE
C) . 
C)  major oil companies operating in the United States. 
D)  U.S.government regulation of gasoline prices.

Question 2

Use the following to answer questions 
Figure: Price Controls  
-(Figure: Price Controls)Refer to the figure.If the government imposes a price ceiling in this market at a price of $6,the result would be a:

Accepted Answer

A)  surplus of 20 units. 
B)  surplus of 10 units. 
C)  shortage of 20 units. 
D)  shortage of 10 units. 
A)  surplus of 20 units. 
B)  surplus of 10 units. 
C)  shortage of 20 units. 
D)  shortage of 10 units.

Question 3

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.If the goods sold are allocated only to the highest-value users,the total consumer surplus in the market would be:

Accepted Answer

A)  $180. 
B)  $30. 
C)  $120. 
D)  $150. 
A)  $180. 
B)  $30. 
C)  $120. 
D)  $150.

Question 4

Figure: Minimum Wage for Country A   Refer to the figure.The deadweight loss from the $8 minimum wage is area:

Accepted Answer

A)  bc. 
B)  ad. 
C)  ce. 
D)  bd. 
A)  bc. 
B)  ad. 
C)  ce. 
D)  bd.

Question 5

When a price ceiling is in effect:

Accepted Answer

A)  there is no competition for goods. 
B)  suppliers have an incentive to provide really good customer service. 
C)  demanders compete for goods in short supply by accepting reductions in quality. 
D)  suppliers compete for customers by inefficiently raising quality levels. 
A)  there is no competition for goods. 
B)  suppliers have an incentive to provide really good customer service. 
C)  demanders compete for goods in short supply by accepting reductions in quality. 
D)  suppliers compete for customers by inefficiently raising quality levels.

Question 6

A price floor causes:

Accepted Answer

A)  excess demand. 
B)  a shortage. 
C)  a surplus. 
D)  quantity demanded to exceed quantity supplied. 
A)  excess demand. 
B)  a shortage. 
C)  a surplus. 
D)  quantity demanded to exceed quantity supplied.

Question 7

Many times after natural disasters such as hurricanes,prices are controlled so that it is illegal to charge any price greater than "pre-hurricane" levels.For consumers who value these goods very highly,is this a good policy? If prices were allowed to increase,what do you think would happen to supply of these highly valued goods? Explain.

Accepted Answer

For consumers who value these goods (lik

Question 8

Which is the MOST correct statement about the impact of rent controls?

Accepted Answer

A)  The short-run supply curve for apartments is inelastic,so rent controls create larger shortages in the short run than in the long run. 
B)  The short-run supply curve for apartments is inelastic,so rent controls create smaller shortages in the short run than in the long run. 
C)  The long-run supply curve for apartments is inelastic,so rent controls create larger shortages in the long run than in the short run. 
D)  The long-run supply curve for apartments is inelastic,so rent controls create smaller shortages in the long run than in the short run. 
A)  The short-run supply curve for apartments is inelastic,so rent controls create larger shortages in the short run than in the long run. 
B)  The short-run supply curve for apartments is inelastic,so rent controls create smaller shortages in the short run than in the long run. 
C)  The long-run supply curve for apartments is inelastic,so rent controls create larger shortages in the long run than in the short run. 
D)  The long-run supply curve for apartments is inelastic,so rent controls create smaller shortages in the long run than in the short run.

Question 9

How did economists try to prove that reductions in new apartment building in Ontario,Canada,during the 1970-1975 period were a result of debates on rent control?

Accepted Answer

A)  They showed that the economy was declining during this period. 
B)  They pointed to the fact that the OPEC oil crisis occurred at this time. 
C)  They contrasted the fact that apartment building was declining while new house building was rising,in the same state of the economy. 
D)  They pointed to the fact that rent controls had not been implemented during the OPEC oil crisis. 
A)  They showed that the economy was declining during this period. 
B)  They pointed to the fact that the OPEC oil crisis occurred at this time. 
C)  They contrasted the fact that apartment building was declining while new house building was rising,in the same state of the economy. 
D)  They pointed to the fact that rent controls had not been implemented during the OPEC oil crisis.

Question 10

Use the following to answer questions 
Figure: Effects of Price Ceilings  
-(Figure: Effects of Price Ceilings)Refer to the figure.Suppose that the data represent the retail gasoline market.At a price ceiling of $2,the total value of wasted time from waiting in line is:

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $20.

Question 11

Typical of price ceilings,the ancient Indian political philosopher known as Kautilya advocated controls to protect against merchant greed,fixing a profit of 5% over the fixed price of local commodities,including textiles.If severe weather were to render the textile market more uncertain (for example,if transportation routes were damaged),what would reasonably happen?

Accepted Answer

A)  There would be no effect. 
B)  Textile quality would wastefully increase. 
C)  Fewer merchants would be willing to supply textiles. 
D)  Deadweight loss would fall. 
A)  There would be no effect. 
B)  Textile quality would wastefully increase. 
C)  Fewer merchants would be willing to supply textiles. 
D)  Deadweight loss would fall.

Question 12

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.If the goods sold are allocated to buyers randomly,what is the total consumer surplus in this market?

Accepted Answer

A)  $90 
B)  $120 
C)  $30 
D)  $150 
A)  $90 
B)  $120 
C)  $30 
D)  $150

Question 13

The effects of price ceilings:

Accepted Answer

A)  are limited to the price-controlled market. 
B)  weaken over time. 
C)  extend beyond the price-controlled market. 
D)  encourage the entry of new firms. 
A)  are limited to the price-controlled market. 
B)  weaken over time. 
C)  extend beyond the price-controlled market. 
D)  encourage the entry of new firms.

Question 14

If quantity supplied equals 85 units and quantity demanded equals 80 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 15

If a price floor is below the equilibrium price,a shortage will result.

Accepted Answer

A) True 
 B)False

Question 16

If a seller facing excess demand is unable to raise the price of the good due to a price ceiling,a likely result will be:

Accepted Answer

A)  an increase in the quantity supplied of the product. 
B)  an increase in the price of the product. 
C)  a decrease in the quality of the product. 
D)  a further decrease in the price of the product. 
A)  an increase in the quantity supplied of the product. 
B)  an increase in the price of the product. 
C)  a decrease in the quality of the product. 
D)  a further decrease in the price of the product.

Question 17

Under airline regulation,within-state flights were cheaper than interstate flights of comparable length.

Accepted Answer

A) True 
 B)False

Question 18

A rent control is a price:

Accepted Answer

A)  floor on car rentals. 
B)  ceiling on car rentals. 
C)  floor on rental housing. 
D)  ceiling on rental housing. 
A)  floor on car rentals. 
B)  ceiling on car rentals. 
C)  floor on rental housing. 
D)  ceiling on rental housing.

Question 19

Price floors would create all of the following effects EXCEPT:

Accepted Answer

A)  surpluses. 
B)  deadweight loss. 
C)  wasteful decreases in product quality. 
D)  misallocation of resources. 
A)  surpluses. 
B)  deadweight loss. 
C)  wasteful decreases in product quality. 
D)  misallocation of resources.

Question 20

Which would MOST LIKELY result after setting a price ceiling on automobiles?

Accepted Answer

A)  a surplus of automobiles 
B)  more friendly automobile salesmen 
C)  fewer safety features 
D)  an increase in demand for automobiles 
A)  a surplus of automobiles 
B)  more friendly automobile salesmen 
C)  fewer safety features 
D)  an increase in demand for automobiles

Economists blame the long lines at gasoline stations in the United States during the 1970s as well as the long delays in construction projects on:

Use the following to answer questions Figure: Price Controls -(Figure: Price Controls)Refer to the figure.If the government imposes a price ceiling in this market at a price of $6,the result would be a:

Figure: Minimum Wage for Country A Refer to the figure.The deadweight loss from the $8 minimum wage is area:

When a price ceiling is in effect:

A price floor causes:

Which is the MOST correct statement about the impact of rent controls?

How did economists try to prove that reductions in new apartment building in Ontario,Canada,during the 1970-1975 period were a result of debates on rent control?

Use the following to answer questions Figure: Effects of Price Ceilings -(Figure: Effects of Price Ceilings)Refer to the figure.Suppose that the data represent the retail gasoline market.At a price ceiling of $2,the total value of wasted time from waiting in line is:

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.If the goods sold are allocated to buyers randomly,what is the total consumer surplus in this market?

The effects of price ceilings:

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

If a price floor is below the equilibrium price,a shortage will result.

If a seller facing excess demand is unable to raise the price of the good due to a price ceiling,a likely result will be:

Under airline regulation,within-state flights were cheaper than interstate flights of comparable length.

A rent control is a price:

Price floors would create all of the following effects EXCEPT:

Which would MOST LIKELY result after setting a price ceiling on automobiles?

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

Economists blame the long lines at gasoline stations in the United States during the 1970s as well as the long delays in construction projects on:

Use the following to answer questions Figure: Price Controls -(Figure: Price Controls)Refer to the figure.If the government imposes a price ceiling in this market at a price of $6,the result would be a:

Figure: Minimum Wage for Country A Refer to the figure.The deadweight loss from the $8 minimum wage is area:

When a price ceiling is in effect:

A price floor causes:

Which is the MOST correct statement about the impact of rent controls?

How did economists try to prove that reductions in new apartment building in Ontario,Canada,during the 1970-1975 period were a result of debates on rent control?

Use the following to answer questions Figure: Effects of Price Ceilings -(Figure: Effects of Price Ceilings)Refer to the figure.Suppose that the data represent the retail gasoline market.At a price ceiling of $2,the total value of wasted time from waiting in line is:

The effects of price ceilings:

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

If a price floor is below the equilibrium price,a shortage will result.

If a seller facing excess demand is unable to raise the price of the good due to a price ceiling,a likely result will be:

Under airline regulation,within-state flights were cheaper than interstate flights of comparable length.

A rent control is a price:

Price floors would create all of the following effects EXCEPT:

Which would MOST LIKELY result after setting a price ceiling on automobiles?

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