Question 1

Which of the following can create a deadweight loss?
i.price supports
ii.price floor
iii.price ceiling

Accepted Answer

A)  i only 
B)  i and iii 
C)  ii and iii 
D)  i, ii and iii 
E)  i and ii 
A)  i only 
B)  i and iii 
C)  ii and iii 
D)  i, ii and iii 
E)  i and ii

Question 2

If an apartment owner charged ________ than a specified rent for housing,the government ________ impose a rent ceiling.

Accepted Answer

A)  more; can 
B)  more; cannot 
C)  less; can 
D)  less; cannot 
E)  less; might 
A)  more; can 
B)  more; cannot 
C)  less; can 
D)  less; cannot 
E)  less; might

Question 3

Nonunion labor is a substitute for union labor,so when the minimum wage ________,the demand for union labor ________.

Accepted Answer

A)  rises; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  rises; increases 
E)  rises; remains the same 
A)  rises; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  rises; increases 
E)  rises; remains the same

Question 4

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $20 per ton,

Accepted Answer

A)  the market price increases. 
B)  the market price decreases. 
C)  marginal cost decreases. 
D)  consumer surplus increases. 
E)  the deadweight loss is decreased. 
A)  the market price increases. 
B)  the market price decreases. 
C)  marginal cost decreases. 
D)  consumer surplus increases. 
E)  the deadweight loss is decreased.

Question 5

In the housing market,if a rent ceiling of $600.00 is imposed when the equilibrium rent is $500.00,why will nothing change?

Accepted Answer

A rent ceiling is the maximum legal rent

Question 6

Rent ceilings are difficult to abolish because

Accepted Answer

A)  they create such large profits for landlords. 
B)  current renters offer political support for ceilings. 
C)  the government doesn't like to give up the tax revenues associated with ceilings. 
D)  they result in an efficient use of resources. 
E)  landlords lobby to keep them in place. 
A)  they create such large profits for landlords. 
B)  current renters offer political support for ceilings. 
C)  the government doesn't like to give up the tax revenues associated with ceilings. 
D)  they result in an efficient use of resources. 
E)  landlords lobby to keep them in place.

Question 7

-The figure above illustrates the bagel market.Which of the following statements is correct?

Accepted Answer

A)  With a price ceiling of $1.00 per bagel, the price of a bagel is $1. 
B)  With a price ceiling of $3.00 per bagel, the price of a bagel is $2. 
C)  With no government intervention, the equilibrium price of a bagel is $2. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  With a price ceiling of $1.00 per bagel, the price of a bagel is $1. 
B)  With a price ceiling of $3.00 per bagel, the price of a bagel is $2. 
C)  With no government intervention, the equilibrium price of a bagel is $2. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 8

Which of the following is an example of the unfairness of rent control?

Accepted Answer

A)  Voluntary exchange is encouraged by rent control. 
B)  Racial discrimination in renting is discouraged by rent control. 
C)  Newcomers have a more difficult time finding apartments. 
D)  Rich people do not get apartments in these markets. 
E)  Too many people rent apartments. 
A)  Voluntary exchange is encouraged by rent control. 
B)  Racial discrimination in renting is discouraged by rent control. 
C)  Newcomers have a more difficult time finding apartments. 
D)  Rich people do not get apartments in these markets. 
E)  Too many people rent apartments.

Question 9

A price ceiling in the market for fuel oil that is below the equilibrium price will

Accepted Answer

A)  lead to the quantity supplied of fuel oil exceeding the quantity demanded. 
B)  lead to the quantity demanded of fuel oil exceeding the quantity supplied. 
C)  decrease the demand for fuel oil. 
D)  increase the supply of fuel oil. 
E)  have no effect in the market for fuel oil. 
A)  lead to the quantity supplied of fuel oil exceeding the quantity demanded. 
B)  lead to the quantity demanded of fuel oil exceeding the quantity supplied. 
C)  decrease the demand for fuel oil. 
D)  increase the supply of fuel oil. 
E)  have no effect in the market for fuel oil.

Question 10

If a rent ceiling is set below the equilibrium price,thus creating a ________,housing may be allocated by increasing search activity or creating a ________.

Accepted Answer

A)  shortage; black market 
B)  shortage; free market 
C)  surplus; black market 
D)  surplus; open market 
E)  surplus; free market 
A)  shortage; black market 
B)  shortage; free market 
C)  surplus; black market 
D)  surplus; open market 
E)  surplus; free market

Question 11

-The figure above illustrates the current market for apartments in Washington,D.C.
a.If the local government imposes a price ceiling of $1,500 per month,is there a shortage? If so,how much? If not,why not?
b.If the local government imposes a price ceiling of $900 per month,is there a shortage? If so,how much? If not,why not?

Accepted Answer

a.There is not a shortage.The equilibriu

Question 12

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

Accepted Answer

A)  quantity of the surplus crop multiplied by the support price. 
B)  quantity of the crop produced multiplied by the support price. 
C)  quantity of the crop purchased by domestic users multiplied by the support price. 
D)  quantity of the surplus crop multiplied by the equilibrium price. 
E)  quantity of the crop purchased by domestic users multiplied by the equilibrium price. 
A)  quantity of the surplus crop multiplied by the support price. 
B)  quantity of the crop produced multiplied by the support price. 
C)  quantity of the crop purchased by domestic users multiplied by the support price. 
D)  quantity of the surplus crop multiplied by the equilibrium price. 
E)  quantity of the crop purchased by domestic users multiplied by the equilibrium price.

Question 13

-The figure above illustrates the bagel market.Which of the following statements is correct?

Accepted Answer

A)  With a price ceiling of $1.00 per bagel, the quantity demanded is equal to the quantity supplied. 
B)  With a price ceiling of $3.00 per bagel, the quantity demanded is greater than the quantity supplied. 
C)  With a price ceiling of $1.00 per bagel, there is a shortage of bagels. 
D)  Answers A and B are correct. 
E)  Answers B and C are correct. 
A)  With a price ceiling of $1.00 per bagel, the quantity demanded is equal to the quantity supplied. 
B)  With a price ceiling of $3.00 per bagel, the quantity demanded is greater than the quantity supplied. 
C)  With a price ceiling of $1.00 per bagel, there is a shortage of bagels. 
D)  Answers A and B are correct. 
E)  Answers B and C are correct.

Question 14

In a competitive labor market,a minimum wage law set above the equilibrium wage rate

Accepted Answer

A)  creates a shortage of labor. 
B)  causes equality between the quantity of labor supplied and the quantity demanded. 
C)  creates a surplus of labor. 
D)  lowers the wage rate paid to workers. 
E)  has no impact. 
A)  creates a shortage of labor. 
B)  causes equality between the quantity of labor supplied and the quantity demanded. 
C)  creates a surplus of labor. 
D)  lowers the wage rate paid to workers. 
E)  has no impact.

Question 15

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the total subsidy paid to tomato farmers?

Accepted Answer

A)  area E 
B)  area B + area C + area D + area F 
C)  area C + area D + area E + area G 
D)  area A 
E)  area F 
A)  area E 
B)  area B + area C + area D + area F 
C)  area C + area D + area E + area G 
D)  area A 
E)  area F

Question 16

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

Accepted Answer

A)  does not apply to all workers. 
B)  boosts the income of highly skilled workers. 
C)  benefits only those workers who are able to find and keep a job. 
D)  benefits nobody. 
E)  cannot be enforced. 
A)  does not apply to all workers. 
B)  boosts the income of highly skilled workers. 
C)  benefits only those workers who are able to find and keep a job. 
D)  benefits nobody. 
E)  cannot be enforced.

Question 17

A price ceiling

Accepted Answer

A)  creates market efficiency by making a good cheaper. 
B)  helps all producers by increasing the price of the good. 
C)  can create a black market for the good. 
D)  reduces search activity. 
E)  benefits all people who want to buy the good. 
A)  creates market efficiency by making a good cheaper. 
B)  helps all producers by increasing the price of the good. 
C)  can create a black market for the good. 
D)  reduces search activity. 
E)  benefits all people who want to buy the good.

Question 18

In order to have an impact,a ________ must be set below the equilibrium price,and when this occurs,________.

Accepted Answer

A)  price ceiling; consumer surplus increases 
B)  price floor; consumer surplus decreases 
C)  price ceiling; producer surplus decreases 
D)  price support; total revenue increases 
E)  price support; consumer surplus increases 
A)  price ceiling; consumer surplus increases 
B)  price floor; consumer surplus decreases 
C)  price ceiling; producer surplus decreases 
D)  price support; total revenue increases 
E)  price support; consumer surplus increases

Question 19

-The graph shows the market for rental housing in Little Rock.The market for apartments is efficient when ________.

Accepted Answer

A)  the quantity of apartments demanded is 12,000 a month 
B)  the rent ceiling is set at $300 a month 
C)  there is no rent ceiling 
D)  the quantity of apartments supplied is 6,000 a month 
E)  the rent charged is less than $450 
A)  the quantity of apartments demanded is 12,000 a month 
B)  the rent ceiling is set at $300 a month 
C)  there is no rent ceiling 
D)  the quantity of apartments supplied is 6,000 a month 
E)  the rent charged is less than $450

Question 20

-The graph shows the labor market for teenagers in Atlanta.If the government sets a minimum wage of $6 an hour,the number of teenagers employed is ________.

Accepted Answer

A)  7,000 
B)  5,000 
C)  4,000 
D)  3,000 
E)  less than 3,000 
A)  7,000 
B)  5,000 
C)  4,000 
D)  3,000 
E)  less than 3,000

Which of the following can create a deadweight loss? i.price supports ii.price floor iii.price ceiling

If an apartment owner charged than a specified rent for housing,the government impose a rent ceiling.

Nonunion labor is a substitute for union labor,so when the minimum wage ,the demand for union labor .

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $20 per ton,

In the housing market,if a rent ceiling of $600.00 is imposed when the equilibrium rent is $500.00,why will nothing change?

Rent ceilings are difficult to abolish because

-The figure above illustrates the bagel market.Which of the following statements is correct?

Which of the following is an example of the unfairness of rent control?

A price ceiling in the market for fuel oil that is below the equilibrium price will

If a rent ceiling is set below the equilibrium price,thus creating a ,housing may be allocated by increasing search activity or creating a .

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

-The figure above illustrates the bagel market.Which of the following statements is correct?

In a competitive labor market,a minimum wage law set above the equilibrium wage rate

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the total subsidy paid to tomato farmers?

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

A price ceiling

In order to have an impact,a must be set below the equilibrium price,and when this occurs,.

-The graph shows the market for rental housing in Little Rock.The market for apartments is efficient when ________.

-The graph shows the labor market for teenagers in Atlanta.If the government sets a minimum wage of $6 an hour,the number of teenagers employed is ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 7: Government Actions in Markets

Which of the following can create a deadweight loss? i.price supports ii.price floor iii.price ceiling

If an apartment owner charged ________ than a specified rent for housing,the government ________ impose a rent ceiling.

Nonunion labor is a substitute for union labor,so when the minimum wage ________,the demand for union labor ________.

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $20 per ton,

In the housing market,if a rent ceiling of $600.00 is imposed when the equilibrium rent is $500.00,why will nothing change?

Rent ceilings are difficult to abolish because

-The figure above illustrates the bagel market.Which of the following statements is correct?

Which of the following is an example of the unfairness of rent control?

A price ceiling in the market for fuel oil that is below the equilibrium price will

If a rent ceiling is set below the equilibrium price,thus creating a ________,housing may be allocated by increasing search activity or creating a ________.

In a crop market with a price support above the equilibrium price,the total amount of the subsidy paid to farmers is equal to the

-The figure above illustrates the bagel market.Which of the following statements is correct?

In a competitive labor market,a minimum wage law set above the equilibrium wage rate

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the total subsidy paid to tomato farmers?

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

A price ceiling

In order to have an impact,a ________ must be set below the equilibrium price,and when this occurs,________.

-The graph shows the market for rental housing in Little Rock.The market for apartments is efficient when ________.

-The graph shows the labor market for teenagers in Atlanta.If the government sets a minimum wage of $6 an hour,the number of teenagers employed is ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

If an apartment owner charged than a specified rent for housing,the government impose a rent ceiling.

Nonunion labor is a substitute for union labor,so when the minimum wage ,the demand for union labor .

If a rent ceiling is set below the equilibrium price,thus creating a ,housing may be allocated by increasing search activity or creating a .

In order to have an impact,a must be set below the equilibrium price,and when this occurs,.