Question 1

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be

Accepted Answer

A)  at the equilibrium level. 
B)  below the equilibrium level because of the use of non-price rationing devices. 
C)  above the equilibrium level because of the combination of price and the use of non-price rationing devices. 
D)  none of the above

Question 2

When universities charge students less than the equilibrium tuition for admission,they have to impose some nonprice-rationing device.

Accepted Answer

A) True 
 B)False

Question 3

Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

Accepted Answer

A)  the schools must develop some type of non-price rationing device. 
B)  it follows that all classes will have a shortage of seats. 
C)  it follows that all classes will have a surplus of seats. 
D)  it follows that some classes will likely have a shortage of seats while other classes may have a surplus of seats. 
E)  a and d

Question 4

If a college sets its tuition __________ the equilibrium tuition,then it will have to use some form of nonprice-rationing device to determine who will be accepted for admission to the college.

Accepted Answer

A)  above 
B)  below 
C)  equal to 
D)  all of the above

Question 5

-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete.If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?

Accepted Answer

A)  area 1 
B)  area 2 
C)  area 3 
D)  area 1 + 2

Question 6

Good weather in cities such as San Diego

Accepted Answer

A)  is absolutely free for the residents of that city. 
B)  is allocated using a weather market. 
C)  imposes indirect payments for the residents of that city. 
D)  b and c 
E)  none of the above

Question 7

Residents of cities with a reputation for good weather,ceteris paribus,

Accepted Answer

A)  pay a higher price for housing because the demand for housing is higher. 
B)  pay a higher price for housing because the supply of housing is higher. 
C)  pay a higher price for housing because the supply and demand for housing is higher. 
D)  pay the same for housing as they would in cities with a reputation for bad weather.

Question 8

Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8 a.m. and 11 p.m.Which toll creates equilibrium at 11 p.m.?

Accepted Answer

A)  P2 
B)  P1 
C)  0 
D)  It is not constant.

Question 9

The space on the freeway is fixed at any instant of time.A supply curve that shows this is

Accepted Answer

A)  perfectly horizontal. 
B)  upward sloping. 
C)  downward sloping. 
D)  perfectly vertical.

Question 10

The higher the price of medical care in general,the lower the __________________ medical care and the ________________ specific items that make up medical care (such as,x-rays).

Accepted Answer

A)  quantity demanded of; higher the demand for 
B)  demand for; higher the demand for 
C)  quantity demanded of; lower the demand for 
D)  demand for; higher the quantity demanded of

Question 11

If there is typically bumper-to-bumper traffic on a freeway at 5 p.m.,we can reduce (or eliminate)the traffic congestion by

Accepted Answer

A)  building more freeways,which would shift the supply curve of freeway space rightward. 
B)  building more freeways,which would shift the supply curve of freeway space leftward. 
C)  encouraging workers to carpool,which would shift the demand curve for freeway space rightward. 
D)  a and b 
E)  b and c

Question 12

The price of good XYZ has a pricing pattern such that P = $50 on Monday through Thursday of every week,and P = $65 on Fridays.If speculators begin participating in the market for good XYZ,their actions will likely lead to a(n)______________ in the price of good XYZ on Monday through Thursday and a(n)_______________ in the price of good XYZ on Friday.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 13

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy,and the equilibrium price of good X will be __________ with the subsidy than without.

Accepted Answer

A)  left;lower 
B)  left; higher 
C)  right; higher 
D)  right;lower

Question 14

When the government enacts policies that lead to lower mortgage lending standards and lower interest rates,their actions can indirectly lead to higher home prices.

Accepted Answer

A) True 
 B)False

Question 15

If the supply of aisle seats and middle seats on an airplane is the same,but the demand for aisle seats is greater than the demand for middle seats,then the equilibrium price of aisle seats will be less than the equilibrium price of middle seats.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively ______________from Phoenix to Miami since the ___________________.

Accepted Answer

A)  lower; demand for moving to Phoenix is greater than demand for moving to Miami 
B)  higher; demand for moving to Phoenix is greater than the demand for moving to Miami 
C)  higher; supply of moving trucks is greater in Phoenix than in Miami 
D)  lower; supply of moving trucks is lower in Phoenix than in Miami

Question 17

The price of a given good is likely to be less variable with speculators than it would be without speculators.

Accepted Answer

A) True 
 B)False

Question 18

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _____________ than the demand for middle seats,then the equilibrium price of aisle seats will be ______________ the equilibrium price of middle seats.

Accepted Answer

A)  greater; higher than 
B)  less; higher than 
C)  greater; lower than 
D)  less; the same as

Question 19

A toll of $1 per car is imposed on a road regardless of time of day.If the toll creates equilibrium travel flows at the busiest time of day,it will create a __________ at all other times.

Accepted Answer

A)  surplus of space 
B)  shortage of space 
C)  zero money price for space 
D)  zero opportunity cost for space

Question 20

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.

Accepted Answer

A)  lower; left 
B)  lower; right 
C)  higher; right 
D)  higher; left

Exam 5: Supply,demand,and Price: Applications

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be

When universities charge students less than the equilibrium tuition for admission,they have to impose some nonprice-rationing device.

Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

If a college sets its tuition __________ the equilibrium tuition,then it will have to use some form of nonprice-rationing device to determine who will be accepted for admission to the college.

-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete.If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?

Good weather in cities such as San Diego

Residents of cities with a reputation for good weather,ceteris paribus,

Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8 a.m. and 11 p.m.Which toll creates equilibrium at 11 p.m.?

The space on the freeway is fixed at any instant of time.A supply curve that shows this is

The higher the price of medical care in general,the lower the __ medical care and the specific items that make up medical care (such as,x-rays) .

If there is typically bumper-to-bumper traffic on a freeway at 5 p.m.,we can reduce (or eliminate) the traffic congestion by

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy,and the equilibrium price of good X will be with the subsidy than without.

When the government enacts policies that lead to lower mortgage lending standards and lower interest rates,their actions can indirectly lead to higher home prices.

If the supply of aisle seats and middle seats on an airplane is the same,but the demand for aisle seats is greater than the demand for middle seats,then the equilibrium price of aisle seats will be less than the equilibrium price of middle seats.

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively from Phoenix to Miami since the _____.

The price of a given good is likely to be less variable with speculators than it would be without speculators.

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _ than the demand for middle seats,then the equilibrium price of aisle seats will be __ the equilibrium price of middle seats.

A toll of $1 per car is imposed on a road regardless of time of day.If the toll creates equilibrium travel flows at the busiest time of day,it will create a __________ at all other times.

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be _ with the subsidy than without because the demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy.

Exam 5: Supply,demand,and Price: Applications

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores.Enrollment at this school will likely be

When universities charge students less than the equilibrium tuition for admission,they have to impose some nonprice-rationing device.

Since most colleges and universities charge the same tuition to every student regardless of what time students choose to take their classes,

If a college sets its tuition __________ the equilibrium tuition,then it will have to use some form of nonprice-rationing device to determine who will be accepted for admission to the college.

-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete.If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?

Good weather in cities such as San Diego

Residents of cities with a reputation for good weather,ceteris paribus,

Refer to Exhibit 5-1,which shows supply and demand for freeway space at both 8 a.m. and 11 p.m.Which toll creates equilibrium at 11 p.m.?

The space on the freeway is fixed at any instant of time.A supply curve that shows this is

The higher the price of medical care in general,the lower the __________________ medical care and the ________________ specific items that make up medical care (such as,x-rays) .

If there is typically bumper-to-bumper traffic on a freeway at 5 p.m.,we can reduce (or eliminate) the traffic congestion by

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy,and the equilibrium price of good X will be __________ with the subsidy than without.

When the government enacts policies that lead to lower mortgage lending standards and lower interest rates,their actions can indirectly lead to higher home prices.

If the supply of aisle seats and middle seats on an airplane is the same,but the demand for aisle seats is greater than the demand for middle seats,then the equilibrium price of aisle seats will be less than the equilibrium price of middle seats.

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively ______________from Phoenix to Miami since the ___________________.

The price of a given good is likely to be less variable with speculators than it would be without speculators.

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _____________ than the demand for middle seats,then the equilibrium price of aisle seats will be ______________ the equilibrium price of middle seats.

A toll of $1 per car is imposed on a road regardless of time of day.If the toll creates equilibrium travel flows at the busiest time of day,it will create a __________ at all other times.

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be ___________ with the subsidy than without because the demand curve with the subsidy will lie to the ______________ of the demand curve without the subsidy.

The higher the price of medical care in general,the lower the __ medical care and the specific items that make up medical care (such as,x-rays) .

Suppose that the government provides a subsidy for the consumption of good X.The demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy,and the equilibrium price of good X will be with the subsidy than without.

Suppose that more people want to move from Miami to Phoenix than want to move from Phoenix to Miami.It is likely that U-Haul rates will be relatively from Phoenix to Miami since the _____.

If the supply of aisle seats equals the supply of middle seats on an airplane,and the demand for aisle seats is _ than the demand for middle seats,then the equilibrium price of aisle seats will be __ the equilibrium price of middle seats.

Suppose that the government provides a subsidy for the consumption of higher education.The equilibrium price of higher education will be _ with the subsidy than without because the demand curve with the subsidy will lie to the ____ of the demand curve without the subsidy.