Question 1

If price ceilings do not allow prices to rise, then demanders will be unable to signal their needs to suppliers.

Accepted Answer

A) True 
 B)False

Question 2

Rent control in New York City has resulted in:

Accepted Answer

A)   people living in luxury apartments and paying low rents.
B)   people having to bribe landlords to get apartments.
C)   people having difficulty finding apartments.
D)   All of the answers are correct.

Question 3

Raising the minimum wage is not an effective way to eliminate poverty because increases in the minimum wage:

Accepted Answer

A)   do not increase incomes.
B)   create incentives for workers to exit the labor force.
C)   create higher unemployment.
D)   tend to simply increase birth rates among low-income households.

Question 4

Minimum wage laws are an example of price floors.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions:
Figure: Price Controls 
-(Figure: Price Controls)  Refer to the figure. Which price control would cause a shortage of 20 units of the good?

Accepted Answer

A)   a price ceiling of $10
B)   a price floor of $10
C)   a price ceiling of $6
D)   a price floor of $6

Question 6

Over time, housing shortages caused by rent control ______ because the supply of housing is ______ elastic in the long run.

Accepted Answer

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

Question 7

Economists blame the long lines at gasoline stations in the United States during the 1970s as well as the long delays in construction projects on:

Accepted Answer

A)   consumers who bought gas too frequently.
B)   the Organization of Petroleum Exporting Countries (OPE
C)  .
C)   major oil companies operating in the United States.
D)   U.S. government regulation of gasoline prices.

Question 8

What would be the LEAST likely result of a price floor in the market for airline travel?

Accepted Answer

A)   rapid replacement of old airliners with new aircraft
B)   narrow seats and basic meals like peanuts or chips with a coffee or soda
C)   special incentives like airline mileage clubs to attract customers
D)   excellent engine maintenance

Question 9

Briefly discuss the U.S. experience with price ceilings during the early 1970s. What effects of the price ceilings became apparent during this period, and how did that period eventually end?

Accepted Answer

In August 1971, President Richard Nixon ...

Question 10

If firms are unable to lower prices because of a legally mandated price floor, then:

Accepted Answer

A)   firms are better off (higher profits)  at the expense of consumers.
B)   firms will often compete by offering higher-quality goods than consumers are willing to pay for.
C)   consumers will decrease their demand due to the high prices.
D)   quantity supplied will be less than quantity demanded.

Question 11

The Federal minimum wage causes unemployment MOSTLY among:

Accepted Answer

A)   middle-class workers.
B)   young unskilled workers.
C)   college graduates.
D)   highly skilled workers.

Question 12

Use the following to answer questions:
Figure: Price Ceilings and Valuation of Uses 
-(Figure: Price Ceilings and Valuation of Uses)  Refer to the figure. Suppose a price ceiling of $15 goes into effect. If the highest-value use and the lowest-value use are equally likely to be satisfied, then the average value of the product is:

Accepted Answer

A)   $45.
B)   $30.
C)   $25.
D)   $35.

Question 13

Setting the maximum legal price above the market price will cause

Accepted Answer

A)   a shortage to develop.
B)   the market to reach an equilibrium outcome.
C)   quantity supplied to exceed quantity demanded.
D)   market inefficiencies.

Question 14

Which statement is FALSE?

Accepted Answer

A)   A frost that destroys half the orange crop will create a surplus of oranges.
B)   It is possible to have a shortage of a good even if its supplies are abundant.
C)   Politicians often blame speculators and profiteers for rising prices rather than changes in supply and demand.
D)   To eliminate a shortage, prices must rise.

Question 15

The Edict on Maximum Prices, established by the Roman Emperor Diocletian, created price ceilings on various jobs and goods in a failed effort to curb inflation. For example, legal pay for a farm laborer could be no more than 10.8¢ a day (payment set in modern currency) . If the market rate of farm labor was 12¢ a day, which would be a plausible consequence of this law?

Accepted Answer

A)   farms would produce more food than they otherwise would
B)   nothing unusual
C)   a laborer would work less hard than he otherwise would
D)   an increase in unemployment for farm hands

Question 16

Southwest Airlines was able to enter the national market in 1978 as a result of:

Accepted Answer

A)   winning a series of lawsuits.
B)   accumulating market share.
C)   airline deregulation.
D)   establishment of new price controls.

Question 17

The minimum wage is an example of a price floor in the labor market.

Accepted Answer

A) True 
 B)False

Question 18

Under rent control, tenants can expect:

Accepted Answer

A)   lower rent and higher-quality housing.
B)   lower rent and lower-quality housing.
C)   higher rent and a shortage of housing.
D)   higher rent and a surplus of housing.

Question 19

One benefit of shortages is that they eliminate competition since buyers cannot compete for goods by paying higher prices.

Accepted Answer

A) True 
 B)False

Question 20

Ancient Athens had strict controls on the price of wheat, and punishment for violation of the price control was death. The speech by a politician imploring a jury to convict an alleged violator of the law survives to this day: "And consider that in consequence of this vocation, very many have already stood trial for their lives; and so great the [earnings] which they are able to derive from it that they prefer to risk their life every day, rather than cease to draw from, the public, their improper profits." Which of the following is the most likely reason why merchants were willing to risk their lives to charge more than the legal price?

Accepted Answer

A)   Merchants were irrationally blinded by greed.
B)   Merchants were not aware of the law, since it was not publically declared.
C)   Merchants could not stay in business if they didn't raise prices.
D)   Merchants did not like the general public, who approved of these laws, and this is how some chose their revenge.

Exam 8: Price Ceilings and Floors

The Federal minimum wage causes unemployment MOSTLY among:

Correct Answer
verified

Southwest Airlines was able to enter the national market in 1978 as a result of:

Correct Answer
verified

Economists blame the long lines at gasoline stations in the United States during the 1970s as well as the long delays in construction projects on:

Correct Answer
verified

Minimum wage laws are an example of price floors.

Correct Answer
verified

Under rent control, tenants can expect:

Correct Answer
verified

Correct Answer
verified

Over time, housing shortages caused by rent control because the supply of housing is elastic in the long run.

Correct Answer
verified

What would be the LEAST likely result of a price floor in the market for airline travel?

Correct Answer
verified

Setting the maximum legal price above the market price will cause

Correct Answer
verified

Raising the minimum wage is not an effective way to eliminate poverty because increases in the minimum wage:

Correct Answer
verified

Briefly discuss the U.S. experience with price ceilings during the early 1970s. What effects of the price ceilings became apparent during this period, and how did that period eventually end?

Correct Answer
verified
In August 1971, President Richard Nixon ...
View Answer

If firms are unable to lower prices because of a legally mandated price floor, then:

Correct Answer
verified

Which statement is FALSE?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions: Figure: Price Controls -(Figure: Price Controls) Refer to the figure. Which price control would cause a shortage of 20 units of the good?

Correct Answer
verified

One benefit of shortages is that they eliminate competition since buyers cannot compete for goods by paying higher prices.

Correct Answer
verified

Rent control in New York City has resulted in:

Correct Answer
verified

If price ceilings do not allow prices to rise, then demanders will be unable to signal their needs to suppliers.

Correct Answer
verified

The minimum wage is an example of a price floor in the labor market.

Correct Answer
verified

Exam 8: Price Ceilings and Floors

The Federal minimum wage causes unemployment MOSTLY among:

Correct AnswerverifiedShow Answer

Southwest Airlines was able to enter the national market in 1978 as a result of:

Correct AnswerverifiedShow Answer

Economists blame the long lines at gasoline stations in the United States during the 1970s as well as the long delays in construction projects on:

Correct AnswerverifiedShow Answer

Minimum wage laws are an example of price floors.

Correct AnswerverifiedShow Answer

Under rent control, tenants can expect:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Over time, housing shortages caused by rent control ______ because the supply of housing is ______ elastic in the long run.

Correct AnswerverifiedShow Answer

What would be the LEAST likely result of a price floor in the market for airline travel?

Correct AnswerverifiedShow Answer

Setting the maximum legal price above the market price will cause

Correct AnswerverifiedShow Answer

Raising the minimum wage is not an effective way to eliminate poverty because increases in the minimum wage:

Correct AnswerverifiedShow Answer

Briefly discuss the U.S. experience with price ceilings during the early 1970s. What effects of the price ceilings became apparent during this period, and how did that period eventually end?

Correct AnswerverifiedIn August 1971, President Richard Nixon ...View AnswerShow Answer

If firms are unable to lower prices because of a legally mandated price floor, then:

Correct AnswerverifiedShow Answer

Which statement is FALSE?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Price Controls -(Figure: Price Controls) Refer to the figure. Which price control would cause a shortage of 20 units of the good?

Correct AnswerverifiedShow Answer

One benefit of shortages is that they eliminate competition since buyers cannot compete for goods by paying higher prices.

Correct AnswerverifiedShow Answer

Rent control in New York City has resulted in:

Correct AnswerverifiedShow Answer

If price ceilings do not allow prices to rise, then demanders will be unable to signal their needs to suppliers.

Correct AnswerverifiedShow Answer

The minimum wage is an example of a price floor in the labor market.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Over time, housing shortages caused by rent control because the supply of housing is elastic in the long run.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In August 1971, President Richard Nixon ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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