Question 1

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 2

Which of the following would most likely increase the price of chicken, a normal good?

Accepted Answer

A) ​a reduction in the price of grains used to produce chicken feed 
B) ​a reduction in the price of beef, a substitute for chicken 
C) ​unusually hot weather that kills millions of chickens before they are ready for market 
D) ​a decrease in consumer income 
A) ​a reduction in the price of grains used to produce chicken feed 
B) ​a reduction in the price of beef, a substitute for chicken 
C) ​unusually hot weather that kills millions of chickens before they are ready for market 
D) ​a decrease in consumer income

Question 3

If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:

Accepted Answer

A) ​an increase in the demand for flour. 
B) ​a decrease in the demand for flour. 
C) ​a decrease in the supply of flour. 
D) ​an increase in the supply of flour. 
A) ​an increase in the demand for flour. 
B) ​a decrease in the demand for flour. 
C) ​a decrease in the supply of flour. 
D) ​an increase in the supply of flour.

Question 4

Refer to Exhibit 5-9. If the government were to remove a $3.50 price floor in the milk market, the result would be:

Accepted Answer

A) ​a decrease in price and increase in the quantity of milk supplied. 
B) ​a decrease in price and increase in the quantity of milk demanded. 
C) ​an increase in both price and the quantity of milk supplied. 
D) ​an increase in both price and the quantity of milk demanded. 
A) ​a decrease in price and increase in the quantity of milk supplied. 
B) ​a decrease in price and increase in the quantity of milk demanded. 
C) ​an increase in both price and the quantity of milk supplied. 
D) ​an increase in both price and the quantity of milk demanded.

Question 5

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A) ​floor. 
B) ​subsidy. 
C) ​support. 
D) ​ceiling. 
A) ​floor. 
B) ​subsidy. 
C) ​support. 
D) ​ceiling.

Question 6

When the demand and supply of grapes both decrease at the same time, we can safely predict that the:​

Accepted Answer

A) ​price of grapes will fall. 
B) ​price of grapes will rise. 
C) ​quantity of grapes exchanged will fall. 
D) ​quantity of grapes exchanged will rise. 
A) ​price of grapes will fall. 
B) ​price of grapes will rise. 
C) ​quantity of grapes exchanged will fall. 
D) ​quantity of grapes exchanged will rise.

Question 7

If a price ceiling of $5 per gallon is imposed on gasoline, and the market equilibrium price is $4.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 8

For a normal good, if incomes rise, we would expect that the equilibrium price will increase and that the equilibrium quantity will increase.

Accepted Answer

A) True 
 B)False

Question 9

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 10

Ceteris paribus, if the price of jet fuel fell, what effect would it have on the market for air travel?

Accepted Answer

A) ​an increase in equilibrium price and an increase in equilibrium quantity. 
B) ​an increase in equilibrium price and a decrease in equilibrium quantity. 
C) ​a decrease in equilibrium price and an increase in equilibrium quantity. 
D) ​a decrease in equilibrium price and a decrease in equilibrium quantity. 
A) ​an increase in equilibrium price and an increase in equilibrium quantity. 
B) ​an increase in equilibrium price and a decrease in equilibrium quantity. 
C) ​a decrease in equilibrium price and an increase in equilibrium quantity. 
D) ​a decrease in equilibrium price and a decrease in equilibrium quantity.

Question 11

A shortage exists in the market for corn at the prevailing price. The shortage will be eliminated by a price:

Accepted Answer

A) ​increase, increasing the supply and decreasing the demand. 
B) ​decrease, increasing the supply and decreasing the demand. 
C) ​decrease, increasing the quantity supplied and decreasing the quantity demanded. 
D) ​increase, increasing the quantity supplied and decreasing the quantity demanded. 
A) ​increase, increasing the supply and decreasing the demand. 
B) ​decrease, increasing the supply and decreasing the demand. 
C) ​decrease, increasing the quantity supplied and decreasing the quantity demanded. 
D) ​increase, increasing the quantity supplied and decreasing the quantity demanded.

Question 12

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) ​decrease, and the quantity sold in the market will increase 
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) ​decrease, and the quantity sold in the market will increase 
D) ​increase, and the quantity sold in the market will increase.

Question 13

Assuming that the demand and supply of a good both increased by the same amount, the new equilibrium would represent:

Accepted Answer

A) ​an increase in price and an increase in quantity exchanged. 
B) ​no change in price and an increase in quantity exchanged. 
C) ​a decrease in price and a decrease in quantity exchanged. 
D) ​no change in price, and an indeterminate change in quantity exchanged. 
A) ​an increase in price and an increase in quantity exchanged. 
B) ​no change in price and an increase in quantity exchanged. 
C) ​a decrease in price and a decrease in quantity exchanged. 
D) ​no change in price, and an indeterminate change in quantity exchanged.

Question 14

A shortage will result whenever:

Accepted Answer

A) ​the government imposes a price floor below equilibrium price. 
B) ​the government imposes a price ceiling above equilibrium price. 
C) ​the government imposes a price floor above equilibrium price. 
D) ​the government imposes a price ceiling below equilibrium price. 
A) ​the government imposes a price floor below equilibrium price. 
B) ​the government imposes a price ceiling above equilibrium price. 
C) ​the government imposes a price floor above equilibrium price. 
D) ​the government imposes a price ceiling below equilibrium price.

Question 15

In January, 2,500 quarts of ice cream are sold in Boston at $2 per quart. In February, 3,000 quarts are sold at $2.50 a quart. This change in the price and quantity sold of ice cream may have been caused by:

Accepted Answer

A) ​a reduction in wages in the Boston area. 
B) ​the introduction of labor-saving, automated ice cream packing machinery. 
C) ​the release of a medical study showing that ice cream consumption improves mental health. 
D) ​the decision by Boston ice cream sellers to eliminate discount coupons. 
A) ​a reduction in wages in the Boston area. 
B) ​the introduction of labor-saving, automated ice cream packing machinery. 
C) ​the release of a medical study showing that ice cream consumption improves mental health. 
D) ​the decision by Boston ice cream sellers to eliminate discount coupons.

Question 16

Exhibit 5-1
​   ​
​
-Refer to Exhibit 5-1. A price ceiling set at $35 would not cause a shortage.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is likely to result in a lower equilibrium price?

Accepted Answer

A) ​An increase in both demand and supply. 
B) ​A decrease in both demand and supply. 
C) ​An increase in demand and a decrease in supply. 
D) ​A decrease in demand and an increase in supply. 
A) ​An increase in both demand and supply. 
B) ​A decrease in both demand and supply. 
C) ​An increase in demand and a decrease in supply. 
D) ​A decrease in demand and an increase in supply.

Question 18

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 potential 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 potential buyers benefit. 
D) ​All of the above are correct.

Question 19

Assuming that the demand and supply of a good have moved in the same direction, and by the same amount, the new equilibrium would represent:

Accepted Answer

A) ​an increase in price and an increase in quantity exchanged. 
B) ​no change in price and an increase in quantity exchanged. 
C) ​a decrease in price and a decrease in quantity exchanged. 
D) ​no change in price, and an indeterminate change in quantity exchanged. 
A) ​an increase in price and an increase in quantity exchanged. 
B) ​no change in price and an increase in quantity exchanged. 
C) ​a decrease in price and a decrease in quantity exchanged. 
D) ​no change in price, and an indeterminate change in quantity exchanged.

Question 20

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

Exam 5: Market in Motion and Price Controls

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

Which of the following would most likely increase the price of chicken, a normal good?

If we observe both an increase in the price of flour and in the number of units sold, this could be explained by:

Refer to Exhibit 5-9. If the government were to remove a $3.50 price floor in the milk market, the result would be:

A legal maximum on the price at which a good can be sold is called a price

When the demand and supply of grapes both decrease at the same time, we can safely predict that the:​

If a price ceiling of $5 per gallon is imposed on gasoline, and the market equilibrium price is $4.50, then the price ceiling is a binding constraint on the market.

For a normal good, if incomes rise, we would expect that the equilibrium price will increase and that the equilibrium quantity will increase.

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Ceteris paribus, if the price of jet fuel fell, what effect would it have on the market for air travel?

A shortage exists in the market for corn at the prevailing price. The shortage will be eliminated by a price:

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

Assuming that the demand and supply of a good both increased by the same amount, the new equilibrium would represent:

A shortage will result whenever:

In January, 2,500 quarts of ice cream are sold in Boston at $2 per quart. In February, 3,000 quarts are sold at $2.50 a quart. This change in the price and quantity sold of ice cream may have been caused by:

Exhibit 5-1 ​ ​ ​ -Refer to Exhibit 5-1. A price ceiling set at $35 would not cause a shortage.

Which of the following is likely to result in a lower equilibrium price?

When a binding price ceiling is imposed on a market,

Assuming that the demand and supply of a good have moved in the same direction, and by the same amount, the new equilibrium would represent:

If a price floor is not binding, then

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

When the demand and supply of grapes both decrease at the same time, we can safely predict that the:

Exhibit 5-1 -Refer to Exhibit 5-1. A price ceiling set at $35 would not cause a shortage.