Question 1

If a price ceiling is set above the equilibrium price,then

Accepted Answer

A)  there will be a surplus of the good. 
B)  there will be a shortage of the good. 
C)  there will be neither a shortage nor a surplus of the good. 
D)  the price ceiling will generate revenue for the government. 
E)  the price ceiling affects suppliers but not demanders. 
A)  there will be a surplus of the good. 
B)  there will be a shortage of the good. 
C)  there will be neither a shortage nor a surplus of the good. 
D)  the price ceiling will generate revenue for the government. 
E)  the price ceiling affects suppliers but not demanders.

Question 2

Suppose the government imposes a price support that is above the equilibrium price.As a result,

Accepted Answer

A)  total revenue increases. 
B)  consumer surplus increases. 
C)  the marginal cost of the last unit produced decreases. 
D)  the government has effectively imposed a price ceiling. 
E)  the subsidy the government pays decreases. 
A)  total revenue increases. 
B)  consumer surplus increases. 
C)  the marginal cost of the last unit produced decreases. 
D)  the government has effectively imposed a price ceiling. 
E)  the subsidy the government pays decreases.

Question 3

With a price support program,who receives a subsidy?

Accepted Answer

A)  only consumers 
B)  only producers 
C)  the government 
D)  importers 
E)  Both consumers and producers receive a subsidy. 
A)  only consumers 
B)  only producers 
C)  the government 
D)  importers 
E)  Both consumers and producers receive a subsidy.

Question 4

To keep the price at the level set by a price support,the government must

Accepted Answer

A)  buy some of the good. 
B)  sell some of the good. 
C)  receive a subsidy from the producers. 
D)  insure that imports are readily available. 
E)  be careful to always set the price support below the equilibrium price. 
A)  buy some of the good. 
B)  sell some of the good. 
C)  receive a subsidy from the producers. 
D)  insure that imports are readily available. 
E)  be careful to always set the price support below the equilibrium price.

Question 5

-The above figure shows the market for 2 bedroom town homes in San Diego.If a rent ceiling is set at $1,000 per month then there is a

Accepted Answer

A)  surplus equal to 150,000 town homes. 
B)  shortage equal to 100,000 town homes. 
C)  surplus equal to 100,000 town homes. 
D)  shortage equal to 150,000 town homes. 
E)  shortage equal to 250,000 town homes. 
A)  surplus equal to 150,000 town homes. 
B)  shortage equal to 100,000 town homes. 
C)  surplus equal to 100,000 town homes. 
D)  shortage equal to 150,000 town homes. 
E)  shortage equal to 250,000 town homes.

Question 6

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 $5 per ton,

Accepted Answer

A)  a deadweight loss is created. 
B)  the market becomes more efficient. 
C)  consumer surplus increases. 
D)  producers' economic profits increase. 
E)  None of the above answers is correct. 
A)  a deadweight loss is created. 
B)  the market becomes more efficient. 
C)  consumer surplus increases. 
D)  producers' economic profits increase. 
E)  None of the above answers is correct.

Question 7

The shortage created by a price ceiling will likely be

Accepted Answer

A)  smaller if the good is a necessity. 
B)  larger if the good is addictive. 
C)  smaller if the good is a luxury. 
D)  unaffected by the time that has elapsed since the price ceiling is implemented. 
E)  None of the above answers is correct. 
A)  smaller if the good is a necessity. 
B)  larger if the good is addictive. 
C)  smaller if the good is a luxury. 
D)  unaffected by the time that has elapsed since the price ceiling is implemented. 
E)  None of the above answers is correct.

Question 8

A rent ceiling on housing creates a problem of allocating the available housing units because

Accepted Answer

A)  the demand for housing decreases and the demand curve shifts leftward. 
B)  the supply of housing increases and the supply curve shifts rightward. 
C)  a shortage of apartments occurs. 
D)  a surplus of apartments occurs. 
E)  it eliminates search, which is one of the major ways housing units are allocated. 
A)  the demand for housing decreases and the demand curve shifts leftward. 
B)  the supply of housing increases and the supply curve shifts rightward. 
C)  a shortage of apartments occurs. 
D)  a surplus of apartments occurs. 
E)  it eliminates search, which is one of the major ways housing units are allocated.

Question 9

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

Accepted Answer

A)  $7 
B)  $15 
C)  $1 
D)  $8 
E)  $0 
A)  $7 
B)  $15 
C)  $1 
D)  $8 
E)  $0

Question 10

An efficient allocation of labor occurs when the

Accepted Answer

A)  marginal benefit to workers exceeds the marginal benefit to firms. 
B)  marginal benefit to firms exceeds the marginal benefit to workers. 
C)  marginal cost to workers is equal to the marginal benefit to firms. 
D)  marginal cost and marginal benefit of both workers and the firms are equal to zero. 
E)  marginal benefit of workers exceeds the marginal cost to firms by as much as possible. 
A)  marginal benefit to workers exceeds the marginal benefit to firms. 
B)  marginal benefit to firms exceeds the marginal benefit to workers. 
C)  marginal cost to workers is equal to the marginal benefit to firms. 
D)  marginal cost and marginal benefit of both workers and the firms are equal to zero. 
E)  marginal benefit of workers exceeds the marginal cost to firms by as much as possible.

Question 11

A rent ceiling set below the equilibrium rent

Accepted Answer

A)  ensures the availability of enough low-rent apartments in a city. 
B)  results in all renters and potential renters being better off. 
C)  creates a situation in which the quantity demanded of housing is greater than quantity supplied. 
D)  ensures that landlords earn a reasonable rate of profit on apartments. 
E)  eliminates discrimination by landlords. 
A)  ensures the availability of enough low-rent apartments in a city. 
B)  results in all renters and potential renters being better off. 
C)  creates a situation in which the quantity demanded of housing is greater than quantity supplied. 
D)  ensures that landlords earn a reasonable rate of profit on apartments. 
E)  eliminates discrimination by landlords.

Question 12

New York City,which has had a rent ceiling law for more than sixty years,has many abandoned apartment buildings throughout the city.Which of the following explains this?

Accepted Answer

A)  Few workers with jobs in the city want to live in there because of pollution. 
B)  No building permits for new apartment buildings have been issued for over fifty years. 
C)  Once any building gets so old, it is abandoned. 
D)  Landlords have no incentive to finance maintenance and remodeling of apartment buildings. 
E)  Rent ceilings make the construction of new buildings so profitable that old buildings are simply abandoned. 
A)  Few workers with jobs in the city want to live in there because of pollution. 
B)  No building permits for new apartment buildings have been issued for over fifty years. 
C)  Once any building gets so old, it is abandoned. 
D)  Landlords have no incentive to finance maintenance and remodeling of apartment buildings. 
E)  Rent ceilings make the construction of new buildings so profitable that old buildings are simply abandoned.

Question 13

-The graph shows the market for ski chalets in Aspen.If a rent ceiling is set at $1,900 a week,then the maximum amount charged in the black market is ________ a week.

Accepted Answer

A)  $1,900 
B)  $2,050 
C)  $2,125 
D)  $225 
E)  $150 
A)  $1,900 
B)  $2,050 
C)  $2,125 
D)  $225 
E)  $150

Question 14

Compare and contrast a price ceiling and a price floor.

Accepted Answer

A price ceiling is the maximum legal pri

Question 15

With a rent ceiling set below the equilibrium rent,
i.all renters are able to rent apartments at a lower rent.
ii.there is a shortage of apartments.
iii.the quantity of apartments supplied does not change because buildings cannot be moved.

Accepted Answer

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

Question 16

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

Accepted Answer

A)  both increase. 
B)  both decrease, but generally not to zero. 
C)  do not change. 
D)  are eliminated. 
E)  are both totally converted into deadweight loss. 
A)  both increase. 
B)  both decrease, but generally not to zero. 
C)  do not change. 
D)  are eliminated. 
E)  are both totally converted into deadweight loss.

Question 17

A rent ceiling is

Accepted Answer

A)  fair, because it helps all renters. 
B)  fair, because it insures that low-income families can rent apartments. 
C)  fair, because it helps all landlords. 
D)  unfair. 
E)  fair, because it helps more renters than it harms. 
A)  fair, because it helps all renters. 
B)  fair, because it insures that low-income families can rent apartments. 
C)  fair, because it helps all landlords. 
D)  unfair. 
E)  fair, because it helps more renters than it harms.

Question 18

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.

Accepted Answer

A)  $800 
B)  $900 
C)  $1,800 
D)  $400 
E)  $200 
A)  $800 
B)  $900 
C)  $1,800 
D)  $400 
E)  $200

Question 19

A price ceiling

Accepted Answer

A)  is an illegal price. 
B)  is the price that exists in a black market. 
C)  is the maximum price that can legally be charged. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  is an illegal price. 
B)  is the price that exists in a black market. 
C)  is the maximum price that can legally be charged. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 20

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect,deadweight loss equals ________.

Accepted Answer

A)  $1,600,000 
B)  $200,000 
C)  $800,000 
D)  $1,800,000 
E)  $400,000 
A)  $1,600,000 
B)  $200,000 
C)  $800,000 
D)  $1,800,000 
E)  $400,000

If a price ceiling is set above the equilibrium price,then

Suppose the government imposes a price support that is above the equilibrium price.As a result,

With a price support program,who receives a subsidy?

To keep the price at the level set by a price support,the government must

-The above figure shows the market for 2 bedroom town homes in San Diego.If a rent ceiling is set at $1,000 per month then there is a

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 $5 per ton,

The shortage created by a price ceiling will likely be

A rent ceiling on housing creates a problem of allocating the available housing units because

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

An efficient allocation of labor occurs when the

A rent ceiling set below the equilibrium rent

New York City,which has had a rent ceiling law for more than sixty years,has many abandoned apartment buildings throughout the city.Which of the following explains this?

-The graph shows the market for ski chalets in Aspen.If a rent ceiling is set at $1,900 a week,then the maximum amount charged in the black market is ________ a week.

Compare and contrast a price ceiling and a price floor.

With a rent ceiling set below the equilibrium rent, i.all renters are able to rent apartments at a lower rent. ii.there is a shortage of apartments. iii.the quantity of apartments supplied does not change because buildings cannot be moved.

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

A rent ceiling is

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.

A price ceiling

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect,deadweight loss equals ________.

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

If a price ceiling is set above the equilibrium price,then

Suppose the government imposes a price support that is above the equilibrium price.As a result,

With a price support program,who receives a subsidy?

To keep the price at the level set by a price support,the government must

-The above figure shows the market for 2 bedroom town homes in San Diego.If a rent ceiling is set at $1,000 per month then there is a

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 $5 per ton,

The shortage created by a price ceiling will likely be

A rent ceiling on housing creates a problem of allocating the available housing units because

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

An efficient allocation of labor occurs when the

A rent ceiling set below the equilibrium rent

New York City,which has had a rent ceiling law for more than sixty years,has many abandoned apartment buildings throughout the city.Which of the following explains this?

-The graph shows the market for ski chalets in Aspen.If a rent ceiling is set at $1,900 a week,then the maximum amount charged in the black market is ________ a week.

Compare and contrast a price ceiling and a price floor.

With a rent ceiling set below the equilibrium rent, i.all renters are able to rent apartments at a lower rent. ii.there is a shortage of apartments. iii.the quantity of apartments supplied does not change because buildings cannot be moved.

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

A rent ceiling is

-The above figure shows the market for biologists.The government decides to set a minimum wage for biologists of $18 per hour.After this minimum wage is in effect,the firms' surplus equals ________.

A price ceiling

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect,deadweight loss equals ________.

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