Question 1

-An effective price ceiling occurs when

Accepted Answer

A)  the government sets a maximum price for a good above the equilibrium price. 
B)  the government sets a minimum price for a good above the equilibrium price. 
C)  the government sets a minimum price for a good below the equilibrium price. 
D)  the government sets a maximum price for a good below the equilibrium price. 
A)  the government sets a maximum price for a good above the equilibrium price. 
B)  the government sets a minimum price for a good above the equilibrium price. 
C)  the government sets a minimum price for a good below the equilibrium price. 
D)  the government sets a maximum price for a good below the equilibrium price.

Question 2

Under rent controls

Accepted Answer

A)  apartments tend to be nicer than they would be under freely competitive markets. 
B)  landlord-tenant relationships are more harmonious than under freely competitive markets. 
C)  the quantity demanded of rental units is less than it would be under freely competitive markets. 
D)  the number of rental units available for rent is lower than under freely competitive markets. 
A)  apartments tend to be nicer than they would be under freely competitive markets. 
B)  landlord-tenant relationships are more harmonious than under freely competitive markets. 
C)  the quantity demanded of rental units is less than it would be under freely competitive markets. 
D)  the number of rental units available for rent is lower than under freely competitive markets.

Question 3

-In the above figure, a shortage could be caused by a government price ceiling set at

Accepted Answer

A)  $1.00. 
B)  $2.00. 
C)  $2.50. 
D)  $3.00. 
A)  $1.00. 
B)  $2.00. 
C)  $2.50. 
D)  $3.00.

Question 4

Which rationing system leads to the most efficient use of available resources?

Accepted Answer

A)  free market 
B)  physical force 
C)  first come, first served 
D)  random assignment 
A)  free market 
B)  physical force 
C)  first come, first served 
D)  random assignment

Question 5

-Refer to the above figure. If a price floor of $5 was set

Accepted Answer

A)  the quantity sold would be 80 units. 
B)  there would be a surplus of 40 units. 
C)  there would be a shortage of 40 units. 
D)  there would be a shortage of 20 units. 
A)  the quantity sold would be 80 units. 
B)  there would be a surplus of 40 units. 
C)  there would be a shortage of 40 units. 
D)  there would be a shortage of 20 units.

Question 6

The adverse effects of rent controls include

Accepted Answer

A)  keeping rental rates too high in a normal market. 
B)  excessive construction of new rental housing. 
C)  reduced incentive to construct new rental housing. 
D)  increased incentives for people to purchase their own homes. 
A)  keeping rental rates too high in a normal market. 
B)  excessive construction of new rental housing. 
C)  reduced incentive to construct new rental housing. 
D)  increased incentives for people to purchase their own homes.

Question 7

If the government sets a maximum price at which a good or service can be sold, it thereby creates

Accepted Answer

A)  a price floor. 
B)  a black market price. 
C)  a price ceiling. 
D)  an illegal price control. 
A)  a price floor. 
B)  a black market price. 
C)  a price ceiling. 
D)  an illegal price control.

Question 8

One result of the agriculture price supports cited in the text is that

Accepted Answer

A)  sometimes surplus food is given away. 
B)  food shortages result in most cases. 
C)  small farms receive most of the benefits. 
D)  none of the above. 
A)  sometimes surplus food is given away. 
B)  food shortages result in most cases. 
C)  small farms receive most of the benefits. 
D)  none of the above.

Question 9

All other factors being constant, a reduction in price tends to cause which of the following?

Accepted Answer

A)  an increase in supply and an increase in demand 
B)  a reduction in supply and an increase in demand 
C)  an increase in quantity supplied and a reduction in quantity demanded 
D)  a reduction in quantity supplied and an increase in quantity demanded 
A)  an increase in supply and an increase in demand 
B)  a reduction in supply and an increase in demand 
C)  an increase in quantity supplied and a reduction in quantity demanded 
D)  a reduction in quantity supplied and an increase in quantity demanded

Question 10

Markets tend to

Accepted Answer

A)  exist primarily in towns or cities. 
B)  increase transaction costs. 
C)  reduce transaction costs. 
D)  make exchange more difficult. 
A)  exist primarily in towns or cities. 
B)  increase transaction costs. 
C)  reduce transaction costs. 
D)  make exchange more difficult.

Question 11

A price ceiling is

Accepted Answer

A)  the lowest price a seller can charge for a good without losing all her customers. 
B)  a legal minimum price that can be charged for a particular good or service. 
C)  a legal maximum price that can be charged for a particular good or service. 
D)  the lowest price a buyer can pay for a good without having to report the purchase to the government. 
A)  the lowest price a seller can charge for a good without losing all her customers. 
B)  a legal minimum price that can be charged for a particular good or service. 
C)  a legal maximum price that can be charged for a particular good or service. 
D)  the lowest price a buyer can pay for a good without having to report the purchase to the government.

Question 12

Excess quantity demanded may result from

Accepted Answer

A)  a government-imposed minimum price above market equilibrium. 
B)  a government-imposed maximum price below market equilibrium. 
C)  an oversupply of output. 
D)  technological progress. 
A)  a government-imposed minimum price above market equilibrium. 
B)  a government-imposed maximum price below market equilibrium. 
C)  an oversupply of output. 
D)  technological progress.

Question 13

If the demand for a product remains the same and the supply falls,

Accepted Answer

A)  the market clearing price will fall and the equilibrium quantity will rise. 
B)  the market clearing price will rise and the equilibrium quantity will fall. 
C)  both the market clearing price and the equilibrium quantity will fall. 
D)  both the market clearing price and the equilibrium quantity will rise. 
A)  the market clearing price will fall and the equilibrium quantity will rise. 
B)  the market clearing price will rise and the equilibrium quantity will fall. 
C)  both the market clearing price and the equilibrium quantity will fall. 
D)  both the market clearing price and the equilibrium quantity will rise.

Question 14

-Refer to the above figure. A price ceiling has been set at P1, and a black market has opened. The equilibrium black market price will be

Accepted Answer

A)  below P1. 
B)  between P1 and P3. 
C)  above P3. 
D)  P2. 
A)  below P1. 
B)  between P1 and P3. 
C)  above P3. 
D)  P2.

Question 15

Which one of the following could account for an increase in the market clearing price of portable power banks?

Accepted Answer

A)  a decrease in demand for portable power banks 
B)  an increase in supply of portable power banks 
C)  an increase in supply along with a decrease in demand 
D)  an increase in demand along with a decrease in supply 
A)  a decrease in demand for portable power banks 
B)  an increase in supply of portable power banks 
C)  an increase in supply along with a decrease in demand 
D)  an increase in demand along with a decrease in supply

Question 16

The role of platform firms is to

Accepted Answer

A)  reduce the amount of market competition among sellers. 
B)  lower transaction costs for buyers and sellers. 
C)  reduce the level of voluntary exchanges in markets. 
D)  reduce the amount of information in the price system. 
A)  reduce the amount of market competition among sellers. 
B)  lower transaction costs for buyers and sellers. 
C)  reduce the level of voluntary exchanges in markets. 
D)  reduce the amount of information in the price system.

Question 17

-Instituting a rent control program will most likely lead to

Accepted Answer

A)  a shortage of rental units. 
B)  overly elaborate and expensive construction. 
C)  an efficient allocation of existing units among consumers. 
D)  an excess quantity supplied of rental units. 
A)  a shortage of rental units. 
B)  overly elaborate and expensive construction. 
C)  an efficient allocation of existing units among consumers. 
D)  an excess quantity supplied of rental units.

Question 18

A drought destroyed a large amount of orange crops in California, leading to

Accepted Answer

A)  a decrease in supply of oranges. 
B)  a decrease in quantity supplied of oranges. 
C)  a decrease in demand for oranges. 
D)  a decrease in quantity demanded for oranges. 
A)  a decrease in supply of oranges. 
B)  a decrease in quantity supplied of oranges. 
C)  a decrease in demand for oranges. 
D)  a decrease in quantity demanded for oranges.

Question 19

Suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains this situation?

Accepted Answer

A)  The supply of Florida oranges decreased, causing the supply of California oranges to increase, which resulted in a higher price. 
B)  The supply of Florida oranges decreased, causing the supply of California oranges to decrease, which resulted in a higher price. 
C)  The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase. 
D)  The demand for Florida oranges fell because of the freeze, and this led to a higher demand for California oranges. 
A)  The supply of Florida oranges decreased, causing the supply of California oranges to increase, which resulted in a higher price. 
B)  The supply of Florida oranges decreased, causing the supply of California oranges to decrease, which resulted in a higher price. 
C)  The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase. 
D)  The demand for Florida oranges fell because of the freeze, and this led to a higher demand for California oranges.

Question 20

-Refer to the above figure. If the government imposes a price floor of $60

Accepted Answer

A)  the quantity of goods that will be traded is 100. 
B)  the quantity of goods that will be traded is 200. 
C)  the quantity of goods that will be traded is 150. 
D)  the quantity of goods that will be traded is 0. 
A)  the quantity of goods that will be traded is 100. 
B)  the quantity of goods that will be traded is 200. 
C)  the quantity of goods that will be traded is 150. 
D)  the quantity of goods that will be traded is 0.

Exam 4: Extensions of Demand and Supply Analysis

-An effective price ceiling occurs when

Under rent controls

-In the above figure, a shortage could be caused by a government price ceiling set at

Which rationing system leads to the most efficient use of available resources?

-Refer to the above figure. If a price floor of $5 was set

The adverse effects of rent controls include

If the government sets a maximum price at which a good or service can be sold, it thereby creates

One result of the agriculture price supports cited in the text is that

All other factors being constant, a reduction in price tends to cause which of the following?

Markets tend to

A price ceiling is

Excess quantity demanded may result from

If the demand for a product remains the same and the supply falls,

-Refer to the above figure. A price ceiling has been set at P1, and a black market has opened. The equilibrium black market price will be

Which one of the following could account for an increase in the market clearing price of portable power banks?

The role of platform firms is to

-Instituting a rent control program will most likely lead to

A drought destroyed a large amount of orange crops in California, leading to

Suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains this situation?

-Refer to the above figure. If the government imposes a price floor of $60

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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