Question 1

Use the following table to answer the next five questions.
 
-At what price level does the labor market experience its largest surplus?

Accepted Answer

A)   $5.00
B)   $5.50
C)   $6.00
D)   $7.50
E)   $8.00F) All of the above
G) A) and B)

Question 2

Tina,an economics student,was just named Miss Florida,based in part on her answer to the question of why price gouging laws should be relaxed in that state.Tina won because she gave which of the following answers?

Accepted Answer

A)   They prevent customers who are willing to pay higher prices for needed products from doing so during a time of disaster.
B)   They cause consumers to consume more of certain products during a time of disaster.
C)   They cause producers to overproduce products during a time of disaster.
D)   They act as a binding price floor in a time of disaster.
E)   They cause a surplus in the product during a time a time of disaster.F) B) and D)
G) A) and E)

Question 3

Use the following information to answer the next four questions.
Market for used cars:
Demand: Qd = 154,000 - 86 P
Supply: Qs = -100 + 14 P
-What would be the equilibrium price for used cars?

Accepted Answer

A)   $100
B)   $154,100
C)   $21,474
D)   $1,541
E)   $72F) None of the above
G) A) and E)

Question 4

Use the following information to answer the next two questions.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
-Which of the following is an accurate statement about the consequence of nonbinding price ceilings?

Accepted Answer

A)   They prevent the seller from receiving the equilibrium price.
B)   They require the seller to advertise the product at the equilibrium price.
C)   They create a surplus in the legal market.
D)   They do not change the quantity of goods bought or sold in the legal market.
E)   They increase the quantity demanded of the good in question.F) B) and E)
G) B) and C)

Question 5

Why is raising the minimum wage generally ineffective?

Accepted Answer

A)   Most employers purchase labor on the black market, where the binding price floor is not present.
B)   The minimum wage is an amount suggested by the government, and employers are under no obligation to pay their employees the suggested basic wage.
C)   The minimum wage is usually set below the prevailing equilibrium wage and is frequently nonbinding.
D)   Employees are often unconcerned with their wages and care more about the benefits that come with the job.
E)   Most employees who hold low-wage jobs work in the black market, where the binding price floor doesn't exist.F) C) and E)
G) None of the above

Question 6

Which of the following is an accurate statement about the consequence of a binding price floor?

Accepted Answer

A)   Binding price floors do not allow sellers to receive a higher price if they sell the product in the legal market.
B)   Binding price floors encourage the formation of a black market.
C)   Binding price floors discourage the formation of a black market.
D)   Binding price floors create a shortage of the product.
E)   Binding price floors cause consumers to want to purchase more of the product in the legal market.F) B) and C)
G) C) and D)

Question 7

Use the following information to answer the next two questions.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
-If a price ceiling is imposed at $15 per unit when the equilibrium market price is $12,there will be:

Accepted Answer

A)   no surplus or shortage.
B)   a surplus.
C)   a shortage.
D)   a downward pressure on prices.
E)   an upward pressure on prices.F) C) and E)
G) C) and D)

Question 8

Why is it that price gouging laws (laws intended to place a temporary limit on the price that can be charged in a time of emergency) do not help those who are affected by the emergency which triggered the law?

Accepted Answer

During an emergency,the demand for certa...

Question 9

Refer to the accompanying figure to answer the next two questions.
 
-What is the incentive to create a black market when a binding price ceiling exists?

Accepted Answer

A)   A black market emerges because sellers have a surplus that they need to sell.
B)   A black market emerges because sellers want a market where they can sell lower-quality products.
C)   A black market emerges because sellers want a market where they can sell higher-quality products at higher prices.
D)   A black market does not emerge because sellers are content to sell at the lower price.
E)   A black market emerges because buyers who have a low opportunity cost are seeking out the product.F) A) and D)
G) A) and E)

Question 10

Which of the following would be true in a city with rent-controlled apartments?

Accepted Answer

A)   Homelessness is reduced.
B)   Landlords face a greater incentive to provide housing.
C)   Apartments are of higher quality.
D)   Rents for those fortunate enough to find an apartment are lower than rents in nearby cities that lack rent controls.
E)   It is more difficult for the landlord to find a tenant willing to rent the apartment.F) D) and E)
G) All of the above

Question 11

Use the following information to answer the next two questions.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
-Setting a price ceiling below the equilibrium price can result in:

Accepted Answer

A)   a surplus, where the quantity demanded exceeds the quantity supplied.
B)   a shortage, where the quantity demanded exceeds the quantity supplied.
C)   a surplus, where the quantity supplied exceeds the quantity demanded.
D)   a shortage, where the quantity supplied exceeds the quantity demanded.
E)   no impact on the quantity demanded or on the quantity supplied.F) B) and E)
G) D) and E)

Question 12

How would an economist explain a teenager's continued unemployment where there exists a minimum wage?

Accepted Answer

A)   The minimum wage law made it such that the quantity of labor willing to work at that wage was less than the quantity of labor demanded at that wage.
B)   The minimum wage law made it illegal to hire teenagers because they likely would have been unable to work a minimum number of hours.
C)   The minimum wage law made it such that the quantity of labor willing to work at that wage was greater than the quantity of labor demanded at that wage.
D)   The minimum wage law made it such that the market had reached equilibrium.
E)   The minimum wage law was nonbinding.F) A) and D)
G) B) and D)

Question 13

Do all buyers benefit from a binding price ceiling?

Accepted Answer

A)   Yes.A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market.
B)   No.A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market.
C)   No.A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products.
D)   No.A binding price ceiling benefits only some buyers because, although the price is initially lower, it eventually increases to the equilibrium price.
E)   No.A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium.F) C) and E)
G) B) and E)

Question 14

Use the following information to answer the next two questions.
Market for a new hardcover book:
Demand: Qd = 325 - 8 P
Supply: Qs = -60 + 3 P
-What would be the quantity demanded if a price ceiling is set at $20?

Accepted Answer

A)   90
B)   45
C)   265
D)   165
E)   305F) B) and E)
G) None of the above

Question 15

Refer to the accompanying figure to answer the next two questions.
 
-What is the incentive to create a black market when a binding price floor exists?

Accepted Answer

A)   A black market emerges because buyers are frustrated with shortages of the product.
B)   A black market emerges because sellers have an incentive to charge a higher price on the illegal market.
C)   A black market emerges because sellers want a market where they can sell higher-quality products.
D)   A black market does not emerge; the price will eventually fall to the equilibrium price.
E)   A black market emerges because sellers need a way to dispose of surplus product.F) D) and E)
G) None of the above

Question 16

What will I do differently as a seller in the black market in the long run?

Accepted Answer

A)   I will substitute away from producing the product.
B)   I will substitute toward producing the product.
C)   When there exists a binding price floor, I will be able to sell the good at a higher price.
D)   When there exists a binding price ceiling, I will be able to sell the good at a lower price.
E)   What I as a seller do in the long run will be no different from what I do in the short run.F) A) and E)
G) A) and B)

Question 17

Refer to the accompanying figure to answer the next two questions.
 
-Why does a shortage that occurs under a binding price ceiling decrease over time?

Accepted Answer

A)   Demand becomes more elastic.
B)   Demand becomes more inelastic.
C)   Demand and supply both become more elastic.
D)   Demand and supply both become more inelastic.
E)   Demand becomes more elastic, but supply becomes more inelastic.F) B) and C)
G) B) and D)

Question 18

Use the following table to answer the next two questions.
 
-If the price floor for corn is set at $5.00,what amount and type of disequilibrium will be present in the market for corn?

Accepted Answer

A)   There will be no shortage or surplus.
B)   There will be a shortage of 103,000.
C)   There will be a surplus of 103,000.
D)   There will be a surplus of 223,000.
E)   There will be a surplus of 120,000.F) B) and C)
G) None of the above

Question 19

As the time frame shifts from the short run to the long run,what happens to consumers who are subject to a binding price floor?

Accepted Answer

A)   They are increasingly willing to substitute away from the good, and the demand curve becomes less elastic.
B)   There are no changes, and elasticity remains unchanged.
C)   They are less willing to substitute away from the good, and the demand curve becomes less elastic.
D)   They are increasingly willing to substitute away from the good, and the demand curve becomes more elastic.
E)   They are less willing to substitute away from the good, and the demand curve becomes more elastic.F) B) and D)
G) A) and E)

Question 20

Use the following figure to answer the next two questions.
 
-If the government imposes a price floor on wheat at $5 and agrees to purchase any surpluses,how much will the government be forced to spend?

Accepted Answer

A)   $15,000,000
B)   $3,000,000
C)   $10,000,000
D)   $25,000,000
E)   nothing because there would be no surplusF) A) and E)
G) All of the above

Exam 4: Price Controls

Refer to the accompanying figure to answer the next two questions. -What is the incentive to create a black market when a binding price ceiling exists?

Correct AnswerverifiedShow Answer

As the time frame shifts from the short run to the long run,what happens to consumers who are subject to a binding price floor?

Correct AnswerverifiedShow Answer

Do all buyers benefit from a binding price ceiling?

Correct AnswerverifiedShow Answer

Use the following table to answer the next five questions. -At what price level does the labor market experience its largest surplus?

Correct AnswerverifiedShow Answer

Which of the following is an accurate statement about the consequence of a binding price floor?

Correct AnswerverifiedShow Answer

How would an economist explain a teenager's continued unemployment where there exists a minimum wage?

Correct AnswerverifiedShow Answer

Refer to the accompanying figure to answer the next two questions. -What is the incentive to create a black market when a binding price floor exists?

Correct AnswerverifiedShow Answer

Which of the following would be true in a city with rent-controlled apartments?

Correct AnswerverifiedShow Answer

Use the following information to answer the next two questions. Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -What would be the quantity demanded if a price ceiling is set at $20?

Correct AnswerverifiedShow Answer

Use the following figure to answer the next two questions. -If the government imposes a price floor on wheat at $5 and agrees to purchase any surpluses,how much will the government be forced to spend?

Correct AnswerverifiedShow Answer

Why is it that price gouging laws (laws intended to place a temporary limit on the price that can be charged in a time of emergency) do not help those who are affected by the emergency which triggered the law?

Correct AnswerverifiedDuring an emergency,the demand for certa...View AnswerShow Answer

Use the following information to answer the next two questions. Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -Setting a price ceiling below the equilibrium price can result in:

Correct AnswerverifiedShow Answer

Refer to the accompanying figure to answer the next two questions. -Why does a shortage that occurs under a binding price ceiling decrease over time?

Correct AnswerverifiedShow Answer

Use the following information to answer the next two questions. Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -If a price ceiling is imposed at $15 per unit when the equilibrium market price is $12,there will be:

Correct AnswerverifiedShow Answer

Tina,an economics student,was just named Miss Florida,based in part on her answer to the question of why price gouging laws should be relaxed in that state.Tina won because she gave which of the following answers?

Correct AnswerverifiedShow Answer

Use the following table to answer the next two questions. -If the price floor for corn is set at $5.00,what amount and type of disequilibrium will be present in the market for corn?

Correct AnswerverifiedShow Answer

What will I do differently as a seller in the black market in the long run?

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Why is raising the minimum wage generally ineffective?

Correct AnswerverifiedShow Answer

Use the following information to answer the next four questions. Market for used cars: Demand: Qd = 154,000 - 86 P Supply: Qs = -100 + 14 P -What would be the equilibrium price for used cars?

Correct AnswerverifiedShow Answer

Use the following information to answer the next two questions. Market for a new hardcover book: Demand: Qd = 325 - 8 P Supply: Qs = -60 + 3 P -Which of the following is an accurate statement about the consequence of nonbinding price ceilings?

Correct AnswerverifiedShow Answer

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During an emergency,the demand for certa...
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