Question 1

Which of the following is not likely to result from an increase in the federal minimum wage?

Accepted Answer

A) ​an increase in the quantity of low-skill labor supplied 
B) ​a decrease in the quantity of low-skill labor demanded 
C) ​a decrease in teenage unemployment 
D) ​an increase in teenage unemployment 
A) ​an increase in the quantity of low-skill labor supplied 
B) ​a decrease in the quantity of low-skill labor demanded 
C) ​a decrease in teenage unemployment 
D) ​an increase in teenage unemployment

Question 2

Both price and quantity will increase when there is a(n)

Accepted Answer

A) ​increase in demand. 
B) ​decrease in demand. 
C) ​increase in supply 
D) ​decrease in supply. 
A) ​increase in demand. 
B) ​decrease in demand. 
C) ​increase in supply 
D) ​decrease in supply.

Question 3

If buyers expected the future price of a good to increase, it would tend to increase the current quantity exchanged.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 5-7   ​
-Refer to Exhibit 5-7. The movement from ____ to ____ is consistent with a decrease in the price of cotton (a substitute).

Accepted Answer

A) ​Point A; Point B 
B) ​Point A; Point F 
C) ​Point A; Point D 
D) ​Point A; Point H 
A) ​Point A; Point B 
B) ​Point A; Point F 
C) ​Point A; Point D 
D) ​Point A; Point H

Question 5

When demand decreases and supply increases, there will be a decrease in the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 6

Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price. An increase in supply in both the wheat and gasoline markets will create:

Accepted Answer

A) ​surpluses in both the wheat and gasoline markets. 
B) ​shortages in both the wheat and gasoline markets. 
C) ​a surplus in the wheat market and an increase the quantity of gasoline traded. 
D) ​a surplus in the wheat market and a shortage in the gasoline market. 
A) ​surpluses in both the wheat and gasoline markets. 
B) ​shortages in both the wheat and gasoline markets. 
C) ​a surplus in the wheat market and an increase the quantity of gasoline traded. 
D) ​a surplus in the wheat market and a shortage in the gasoline market.

Question 7

Which of the following is likely to result in a larger equilibrium quantity exchanged?

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 8

A price ceiling is binding when it is set

Accepted Answer

A) ​above the equilibrium price, causing a shortage. 
B) ​above the equilibrium price, causing a surplus. 
C) ​below the equilibrium price, causing a shortage. 
D) ​below the equilibrium price, causing a surplus. 
A) ​above the equilibrium price, causing a shortage. 
B) ​above the equilibrium price, causing a surplus. 
C) ​below the equilibrium price, causing a shortage. 
D) ​below the equilibrium price, causing a surplus.

Question 9

If the demand for apples increases at the same time the supply of apples falls, the price of apples will tend to fall.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the equilibrium price of bread is $2.00 per loaf. If the government sets a price ceiling of $2.50 per loaf:

Accepted Answer

A) ​the price of wheat will rise and a shortage is created. 
B) ​the quantity supplied of wheat will increase. 
C) ​there will be no change in the quantity of bread demanded or supplied. 
D) ​there will be a shortage of bread. 
A) ​the price of wheat will rise and a shortage is created. 
B) ​the quantity supplied of wheat will increase. 
C) ​there will be no change in the quantity of bread demanded or supplied. 
D) ​there will be a shortage of bread.

Question 11

Exhibit 5-10   ​
-Refer to Exhibit 5-10. The graph portrays the market for gasoline for which a ____ has been imposed, and, as a result, a ____ of gasoline occurs.

Accepted Answer

A) ​price floor; surplus 
B) ​price ceiling; shortage 
C) ​price ceiling; surplus 
D) ​price floor; shortage 
A) ​price floor; surplus 
B) ​price ceiling; shortage 
C) ​price ceiling; surplus 
D) ​price floor; shortage

Question 12

The invention of machinery that can double the amount of gold extracted from raw ore will likely:

Accepted Answer

A) ​raise the world price of gold to pay for the new machinery. 
B) ​lower the world price of gold because any given amount can now be produced more cheaply. 
C) ​raise the world price of gold because miners' wages must double as their productivity doubles. 
D) ​lower the world price of gold only if new mining companies are not allowed to enter the industry. 
A) ​raise the world price of gold to pay for the new machinery. 
B) ​lower the world price of gold because any given amount can now be produced more cheaply. 
C) ​raise the world price of gold because miners' wages must double as their productivity doubles. 
D) ​lower the world price of gold only if new mining companies are not allowed to enter the industry.

Question 13

Exhibit 5-1
​   ​
​
-Refer to Exhibit 5-1. A price floor set at $15 would create a shortage of 20 units

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 5-4
​  
-Refer to Exhibit 5-4. A movement from S1 to S2 could occur if:

Accepted Answer

A) ​there is an increase in the price of submarine sandwiches. 
B) ​there is an increase in the price of potato chips, a complement to submarine sandwiches. 
C) ​there is a reduction in the price of sliced beef used to make submarine sandwiches. 
D) ​there is an increase in the price of wheat bread used to make submarine sandwiches. 
A) ​there is an increase in the price of submarine sandwiches. 
B) ​there is an increase in the price of potato chips, a complement to submarine sandwiches. 
C) ​there is a reduction in the price of sliced beef used to make submarine sandwiches. 
D) ​there is an increase in the price of wheat bread used to make submarine sandwiches.

Question 15

A binding price floor 
I.causes a surplus.
II.causes a shortagE.
iii.is set at a price above the equilibrium pricE.
iv.
Is set at a price below the equilibrium pricE.​

Accepted Answer

A) ​(i) only 
B) ​(iii) only 
C) ​(i) and (iii) only 
D) ​(ii) and (iv) only 
A) ​(i) only 
B) ​(iii) only 
C) ​(i) and (iii) only 
D) ​(ii) and (iv) only

Question 16

Which of the following is likely to result in a higher 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 17

If both market demand and supply increase simultaneously by the same magnitudes, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

A) ​Not change; decrease 
B) ​increase; increase 
C) ​increase; not change 
D) ​None of the above are correct 
A) ​Not change; decrease 
B) ​increase; increase 
C) ​increase; not change 
D) ​None of the above are correct

Question 18

Exhibit 5-2
​
The diagram below represents the market for butter.  
-Refer to Exhibit 5-3. For a price floor to be binding in this market, it could be set at

Accepted Answer

A) ​any price below $25. 
B) ​any price above $25. 
C) ​a price between $15 and $20. 
D) None of the above are true. 
A) ​any price below $25. 
B) ​any price above $25. 
C) ​a price between $15 and $20. 
D) None of the above are true.

Question 19

If the price of a good decreased,

Accepted Answer

A) ​It would also increase the quantity exchanged if it was caused by an increase in demand. 
B) It would also decrease the quantity exchanged if it was caused by an increase in supply. 
C) We would not know how quantity would change if we didn't know whether it was due to a change in demand or a change in supply. 
D) All of the above would be true. 
A) ​It would also increase the quantity exchanged if it was caused by an increase in demand. 
B) It would also decrease the quantity exchanged if it was caused by an increase in supply. 
C) We would not know how quantity would change if we didn't know whether it was due to a change in demand or a change in supply. 
D) All of the above would be true.

Question 20

Exhibit 5-11
Panel (a)
Panel (b)   ​  
-Refer to Exhibit 5-11. The price ceiling shown in panel (a)

Accepted Answer

A) ​is not binding. 
B) ​creates a surplus. 
C) ​creates a shortage. 
D) ​None of the above are correct. 
A) ​is not binding. 
B) ​creates a surplus. 
C) ​creates a shortage. 
D) ​None of the above are correct.

Exam 5: Market in Motion and Price Controls

Which of the following is not likely to result from an increase in the federal minimum wage?

Both price and quantity will increase when there is a(n)

If buyers expected the future price of a good to increase, it would tend to increase the current quantity exchanged.

Exhibit 5-7 ​ -Refer to Exhibit 5-7. The movement from ____ to ____ is consistent with a decrease in the price of cotton (a substitute).

When demand decreases and supply increases, there will be a decrease in the equilibrium price.

Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price. An increase in supply in both the wheat and gasoline markets will create:

Which of the following is likely to result in a larger equilibrium quantity exchanged?

A price ceiling is binding when it is set

If the demand for apples increases at the same time the supply of apples falls, the price of apples will tend to fall.

Suppose the equilibrium price of bread is $2.00 per loaf. If the government sets a price ceiling of $2.50 per loaf:

Exhibit 5-10 ​ -Refer to Exhibit 5-10. The graph portrays the market for gasoline for which a ____ has been imposed, and, as a result, a ____ of gasoline occurs.

The invention of machinery that can double the amount of gold extracted from raw ore will likely:

Exhibit 5-1 ​ ​ ​ -Refer to Exhibit 5-1. A price floor set at $15 would create a shortage of 20 units

Exhibit 5-4 ​ -Refer to Exhibit 5-4. A movement from S1 to S2 could occur if:

A binding price floor I.causes a surplus. II.causes a shortagE. iii.is set at a price above the equilibrium pricE. iv. Is set at a price below the equilibrium pricE.​

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

If both market demand and supply increase simultaneously by the same magnitudes, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-3. For a price floor to be binding in this market, it could be set at

If the price of a good decreased,

Exhibit 5-11 Panel (a) Panel (b) ​ -Refer to Exhibit 5-11. The price ceiling shown in panel (a)

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

Exhibit 5-7 -Refer to Exhibit 5-7. The movement from to is consistent with a decrease in the price of cotton (a substitute).

Exhibit 5-10 -Refer to Exhibit 5-10. The graph portrays the market for gasoline for which a has been imposed, and, as a result, a of gasoline occurs.

Exhibit 5-1 -Refer to Exhibit 5-1. A price floor set at $15 would create a shortage of 20 units

Exhibit 5-4 -Refer to Exhibit 5-4. A movement from S₁ to S₂ could occur if:

A binding price floor I.causes a surplus. II.causes a shortagE. iii.is set at a price above the equilibrium pricE. iv. Is set at a price below the equilibrium pricE.

If both market demand and supply increase simultaneously by the same magnitudes, then equilibrium quantity will (be) and equilibrium price will (be) .

Exhibit 5-2 The diagram below represents the market for butter. -Refer to Exhibit 5-3. For a price floor to be binding in this market, it could be set at

Exhibit 5-11 Panel (a) Panel (b) -Refer to Exhibit 5-11. The price ceiling shown in panel (a)