Question 1

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Accepted Answer

A)  area A 
B)  area B 
C)  area C 
D)  area D 
E)  area E 
A)  area A 
B)  area B 
C)  area C 
D)  area D 
E)  area E

Question 2

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Accepted Answer

A minimum wage set above the equilibrium

Question 3

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

Accepted Answer

A)  the quantity supplied of milk exceeds the quantity demanded. 
B)  the quantity supplied of milk falls short of the quantity demanded. 
C)  the supply increases. 
D)  the market will not be affected. 
E)  there will be a shortage of milk. 
A)  the quantity supplied of milk exceeds the quantity demanded. 
B)  the quantity supplied of milk falls short of the quantity demanded. 
C)  the supply increases. 
D)  the market will not be affected. 
E)  there will be a shortage of milk.

Question 4

One result of a minimum wage is

Accepted Answer

A)  illegal hiring of people at wages below the minimum wage. 
B)  more people with jobs. 
C)  a change in the equilibrium wage. 
D)  lower costs paid by firms. 
E)  fewer people searching for work because they realize that firms have decreased the number of people hired. 
A)  illegal hiring of people at wages below the minimum wage. 
B)  more people with jobs. 
C)  a change in the equilibrium wage. 
D)  lower costs paid by firms. 
E)  fewer people searching for work because they realize that firms have decreased the number of people hired.

Question 5

Which of the following is true?
i.A price support is inefficient.
ii.A price floor set above the equilibrium price creates a surplus.
iii.A price ceiling set above the equilibrium price creates a black market.

Accepted Answer

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

Question 6

-The above figure shows the market for a prescription drug.What is the equilibrium price of the drug? How many doses are purchased? Suppose the government imposes a price ceiling of $1.50 a dose.How many doses are purchased after the price ceiling is imposed?

Accepted Answer

The equilibrium price is $2.50 per dose.

Question 7

People who benefit from a rent ceiling include

Accepted Answer

A)  all landlords. 
B)  taxpayers. 
C)  tenants who have a rent-controlled apartment. 
D)  potential tenants, that is, people looking for apartments. 
E)  all landlords and some tenants. 
A)  all landlords. 
B)  taxpayers. 
C)  tenants who have a rent-controlled apartment. 
D)  potential tenants, that is, people looking for apartments. 
E)  all landlords and some tenants.

Question 8

The deadweight loss from a rent ceiling below the equilibrium rent is smallest when the supply of housing is

Accepted Answer

A)  perfectly elastic. 
B)  elastic but not perfectly elastic. 
C)  unit elastic. 
D)  inelastic but not perfectly inelastic. 
E)  perfectly inelastic. 
A)  perfectly elastic. 
B)  elastic but not perfectly elastic. 
C)  unit elastic. 
D)  inelastic but not perfectly inelastic. 
E)  perfectly inelastic.

Question 9

A minimum wage law

Accepted Answer

A)  lowers the wage rate of workers who are able to get a job. 
B)  increases employment. 
C)  increases the time spent searching by workers who cannot find a job. 
D)  creates efficiency in the labor market. 
E)  must be set below the equilibrium wage rate in order to have an impact. 
A)  lowers the wage rate of workers who are able to get a job. 
B)  increases employment. 
C)  increases the time spent searching by workers who cannot find a job. 
D)  creates efficiency in the labor market. 
E)  must be set below the equilibrium wage rate in order to have an impact.

Question 10

A price floor is a price

Accepted Answer

A)  below which a seller cannot legally sell. 
B)  above which a seller cannot legally sell. 
C)  that creates a shortage of the good if it is set above the equilibrium price. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A)  below which a seller cannot legally sell. 
B)  above which a seller cannot legally sell. 
C)  that creates a shortage of the good if it is set above the equilibrium price. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 11

Explain why a price floor set below the equilibrium price is ineffective.

Accepted Answer

Price floors are legal minimums; it is l

Question 12

A minimum wage that is above the equilibrium wage rate

Accepted Answer

A)  increases efficiency within the labor market. 
B)  increases the quantity of labor demanded. 
C)  creates a deadweight loss. 
D)  has no effect on the labor market because it is set above the equilibrium wage rate. 
E)  None of the above answers is correct. 
A)  increases efficiency within the labor market. 
B)  increases the quantity of labor demanded. 
C)  creates a deadweight loss. 
D)  has no effect on the labor market because it is set above the equilibrium wage rate. 
E)  None of the above answers is correct.

Question 13

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

Accepted Answer

A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
E)  unit elastic; unit elastic 
A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
E)  unit elastic; unit elastic

Question 14

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month.
-As shown in the figure above,the rent ceiling ________ consumer surplus and ________ producer surplus.

Accepted Answer

A)  decreases; decreases 
B)  decreases; increases 
C)  increases; increases 
D)  increases; decreases 
E)  decreases; does not change 
A)  decreases; decreases 
B)  decreases; increases 
C)  increases; increases 
D)  increases; decreases 
E)  decreases; does not change

Question 15

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.When the price ceiling is in place and taking account of the resources lost in search,consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed.

Accepted Answer

A)  decreases; increases 
B)  decreases; decreases 
C)  increases; increases 
D)  increases; decreases 
E)  does not change; increases 
A)  decreases; increases 
B)  decreases; decreases 
C)  increases; increases 
D)  increases; decreases 
E)  does not change; increases

Question 16

Which of the following is true regarding a price support set above the equilibrium price?
i.The price support increases the price consumers pay.
ii.The price support creates a deadweight loss.
iii.The price support decreases output.

Accepted Answer

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

Question 17

A price floor makes prices

Accepted Answer

A)  below the price floor illegal. 
B)  above the price floor illegal. 
C)  below the equilibrium price illegal. 
D)  above the equilibrium price illegal. 
E)  None of the above answers is correct. 
A)  below the price floor illegal. 
B)  above the price floor illegal. 
C)  below the equilibrium price illegal. 
D)  above the equilibrium price illegal. 
E)  None of the above answers is correct.

Question 18

-In the figure above,if the minimum wage is $8 per hour,then

Accepted Answer

A)  resources used in job-search activity increase compared to the situation before the minimum wage. 
B)  it is legal to hire workers for a wage below the minimum wage because otherwise unemployment would result. 
C)  the deadweight loss is minimized. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  resources used in job-search activity increase compared to the situation before the minimum wage. 
B)  it is legal to hire workers for a wage below the minimum wage because otherwise unemployment would result. 
C)  the deadweight loss is minimized. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 19

In the 1980s,one of the most common sights in the socialist countries,such as the former Soviet Union and North Korea,were long lines for bread,sugar,and other necessities.These countries had price ceilings on these necessities.Some of the socialist nations,such as the former Soviet Union,have moved to a market economy by lifting the price ceilings,while others,such as North Korea,have retained their price ceilings.What prediction do you make about the presence (or absence)of long lines today in the former Soviet Union and North Korea? Explain your answer.

Accepted Answer

The long lines have disappeared in the f

Question 20

An increase in the minimum wage to $15 per hour would lead to

Accepted Answer

A)  an increase in search activity for many workers. 
B)  a decrease in search activity for many workers. 
C)  a decrease in unemployment. 
D)  no change in unemployment. 
E)  no change in employment. 
A)  an increase in search activity for many workers. 
B)  a decrease in search activity for many workers. 
C)  a decrease in unemployment. 
D)  no change in unemployment. 
E)  no change in employment.

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

One result of a minimum wage is

Which of the following is true? i.A price support is inefficient. ii.A price floor set above the equilibrium price creates a surplus. iii.A price ceiling set above the equilibrium price creates a black market.

-The above figure shows the market for a prescription drug.What is the equilibrium price of the drug? How many doses are purchased? Suppose the government imposes a price ceiling of $1.50 a dose.How many doses are purchased after the price ceiling is imposed?

People who benefit from a rent ceiling include

The deadweight loss from a rent ceiling below the equilibrium rent is smallest when the supply of housing is

A minimum wage law

A price floor is a price

Explain why a price floor set below the equilibrium price is ineffective.

A minimum wage that is above the equilibrium wage rate

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -As shown in the figure above,the rent ceiling consumer surplus and producer surplus.

Which of the following is true regarding a price support set above the equilibrium price? i.The price support increases the price consumers pay. ii.The price support creates a deadweight loss. iii.The price support decreases output.

A price floor makes prices

-In the figure above,if the minimum wage is $8 per hour,then

An increase in the minimum wage to $15 per hour would lead to

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

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

One result of a minimum wage is

Which of the following is true? i.A price support is inefficient. ii.A price floor set above the equilibrium price creates a surplus. iii.A price ceiling set above the equilibrium price creates a black market.

-The above figure shows the market for a prescription drug.What is the equilibrium price of the drug? How many doses are purchased? Suppose the government imposes a price ceiling of $1.50 a dose.How many doses are purchased after the price ceiling is imposed?

People who benefit from a rent ceiling include

The deadweight loss from a rent ceiling below the equilibrium rent is smallest when the supply of housing is

A minimum wage law

A price floor is a price

Explain why a price floor set below the equilibrium price is ineffective.

A minimum wage that is above the equilibrium wage rate

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -As shown in the figure above,the rent ceiling ________ consumer surplus and ________ producer surplus.

Which of the following is true regarding a price support set above the equilibrium price? i.The price support increases the price consumers pay. ii.The price support creates a deadweight loss. iii.The price support decreases output.

A price floor makes prices

-In the figure above,if the minimum wage is $8 per hour,then

An increase in the minimum wage to $15 per hour would lead to

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

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -As shown in the figure above,the rent ceiling consumer surplus and producer surplus.