Question 1

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

Accepted Answer

A)   100
B)   154,100
C)   21,474
D)   1,541
E)   153,900

Question 2

When market participants are allowed through their interactions to find the price, there will be equilibrium where the quantity supplied by buyers equals the quantity supplied by sellers. If this is the case, why does the government intervene in certain markets by imposing a price floor? Why does the government intervene in certain markets by imposing a price ceiling? Which market participant (the buyer or the seller) will lobby the government to secure passage of a binding price floor? Which one will lobby for a binding price ceiling?

Accepted Answer

The government will generally intervene ...

Question 3

Refer to the accompanying table to answer the next  questions. 
-At what price level does the apartment market reach equilibrium?

Accepted Answer

A)   $1,500
B)   $1,550
C)   $1,600
D)   $1,650
E)   $1,700

Question 4

Which of the following is a correct statement about a minimum wage law?

Accepted Answer

A)   It reduces costs for employers.
B)   It ensures that all who want a job can get a job with a high enough wage.
C)   It causes prices to rise as producers pay more for labor.
D)   It is a price ceiling law that makes wages higher than the market equilibrium price.
E)   It is a price floor law that forces wages to be lower than the market equilibrium price.

Question 5

What will happen in a market where a nonbinding price ceiling is removed?

Accepted Answer

A)   There will be downward pressure on the price in the legal market.
B)   The products sold will improve in quality and become more plentiful.
C)   Sellers will face a reduced incentive to sell the product.
D)   The price and quantity will not change in the legal market.
E)   There will be increased pressure to buy and sell the good on the black market.

Question 6

If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?

Accepted Answer

A)   The black market price will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.
B)   The black market price will fall over time as both the supply and demand curves become more inelastic.
C)   The black market price will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.
D)   The black market price will fall over time as both the supply and demand curves become more elastic.
E)   The black market price will not change over time.

Question 7

What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

Accepted Answer

A)   Both the quality and the size of the product will decrease.
B)   The quality of the product will increase but the size of the product will decrease.
C)   Both the quality and the size of the product will increase.
D)   The quality of the product will decrease but the size of the product will increase.
E)   Neither the quality nor the size of the product will be affected.

Question 8

Use the following table to answer the next 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)   $8.00

Question 9

The government has imposed a price control for many agricultural products in an effort to support farmers. In the case of price floor P2 in the accompanying figure, how much of a disequilibrium in quantity exists? 2 in the accompanying figure, how much of a disequilibrium in quantity exists?   A)  a shortage of 30,000 units B)  a surplus of 120,000 units C)  30,000 units D)  a surplus of 30,000 units E)  an excess of $3" class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   a shortage of 30,000 units
B)   a surplus of 120,000 units
C)   30,000 units
D)   a surplus of 30,000 units
E)   an excess of $3

Question 10

What is a black market?

Accepted Answer

A)   It is an illegal market that emerges when binding and nonbinding price controls are in place.
B)   It is an illegal market that emerges when binding price ceilings are in place.
C)   It is an illegal market that emerges when binding price floors are in place.
D)   It is an illegal market that emerges when only binding price ceilings and binding price floors are in place.
E)   It is an illegal market that emerges when no price controls are present.

Question 11

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.

Question 12

As a seller of a product subject to a binding price floor, you would be better off in which of the following situations?

Accepted Answer

A)   You would be better off under a binding price floor because you would be able to sell all that you produce at a higher price.
B)   You would be better off under a binding price floor because you would be able to sell goods that are smaller and cost less to produce.
C)   You would be better off under a binding price floor because you would be able to sell goods of lower quality, which cost less to produce.
D)   You would be better off under a binding price floor because you could sell any of the resulting surplus to the government.
E)   There is no scenario where a seller is better off when selling a good that is subject to a binding price floor.

Question 13

Why do shortages develop under a binding price ceiling?

Accepted Answer

A)   It encourages sellers to produce more of the product.
B)   It encourages buyers to purchase less of the product.
C)   It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
D)   It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market.
E)   It encourages sellers to increase the quality of the product they sell, which, in turn, increases the quantity demanded.

Question 14

If you were a politician, why would you find it difficult to remove a binding price ceiling?

Accepted Answer

A)   because it greatly benefits firms, and they would spend a lot of money to lobby against the law's repeal
B)   because it greatly benefits government, which receives additional tax revenue as a result
C)   because it greatly benefits all consumers, and they are also voters
D)   because it greatly benefits some consumers who are also voters
E)   because it greatly benefits society as a whole, with all consumers able to buy as much as firms produce

Question 15

Refer to the accompanying table to answer the next  questions. 
-At what price level does the apartment market experience its largest surplus?

Accepted Answer

A)   $1,500
B)   $1,550
C)   $1,700
D)   $1,750
E)   $1,800

Question 16

Use the following information to answer the next  questions.
Market for used cars:
Demand: Qd = 154,000 - 86 P
Supply: Qs = -100 + 14 P
-What would be the quantity demanded if a price ceiling is set at $1,000?

Accepted Answer

A)   500
B)   54,100
C)   68,000
D)   13,900
E)   21,474

Question 17

What will happen in a market where a binding price floor is removed?

Accepted Answer

A)   The products sold will become scarcer.
B)   There will be upward pressure on the prices.
C)   There will be downward pressure on the prices.
D)   The price or quantity of the product sold in the legal market will not change.
E)   There will be increased pressure to buy and sell the good on the black market.

Question 18

Refer to the accompanying figure for the next questions. 3, predict the resulting surplus or shortage. A)  There would be a shortage of 75,000 units. B)  There would be a surplus of 75,000 units. C)  There would be neither a shortage nor a surplus. D)  There would be a shortage of 150,000 units. E)  There would be a surplus of 150,000 units." class="answers-bank-image d-inline" rel="preload" >
-The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P3, predict the resulting surplus or shortage.

Accepted Answer

A)   There would be a shortage of 75,000 units.
B)   There would be a surplus of 75,000 units.
C)   There would be neither a shortage nor a surplus.
D)   There would be a shortage of 150,000 units.
E)   There would be a surplus of 150,000 units.

Question 19

One strategy I might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments. What will happen if I get elected and am able to pass such a law?

Accepted Answer

A)   The price ceiling will increase the number of apartments available for rent.
B)   The price ceiling will cause the demand curve to shift.
C)   The price ceiling will cause the supply curve to shift.
D)   The price ceiling will decrease the number of students who want to rent an apartment.
E)   The price ceiling will cause students to sleep in their cars or to move in with their friends because they won't be able to find a place to live.

Question 20

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.

Exam 4: Price Controls

What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

Correct Answer
verified

Do all buyers benefit from a binding price ceiling?

Correct Answer
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Why do shortages develop under a binding price ceiling?

Correct Answer
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What is a black market?

Correct Answer
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Which of the following is a correct statement about a minimum wage law?

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

Correct Answer
verified

What will happen in a market where a nonbinding price ceiling is removed?

Correct Answer
verified

Refer to the accompanying table to answer the next questions. -At what price level does the apartment market reach equilibrium?

Correct Answer
verified

What will happen in a market where a binding price floor is removed?

Correct Answer
verified

One strategy I might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments. What will happen if I get elected and am able to pass such a law?

Correct Answer
verified

The government has imposed a price control for many agricultural products in an effort to support farmers. In the case of price floor P₂ in the accompanying figure, how much of a disequilibrium in quantity exists?

Correct Answer
verified

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

Correct Answer
verified

If you were a politician, why would you find it difficult to remove a binding price ceiling?

Correct Answer
verified

Use the following information to answer the next questions. Market for used cars: Demand: Q_d = 154,000 - 86 P Supply: Q_s = -100 + 14 P -What would be the quantity demanded if a price ceiling is set at $1,000?

Correct Answer
verified

Correct Answer
verified
The government will generally intervene ...
View Answer

As a seller of a product subject to a binding price floor, you would be better off in which of the following situations?

Correct Answer
verified

If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?

Correct Answer
verified

Refer to the accompanying table to answer the next questions. -At what price level does the apartment market experience its largest surplus?

Correct Answer
verified

Refer to the accompanying figure for the next questions. -The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P₃, predict the resulting surplus or shortage.

Correct Answer
verified

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 Answer
verified

Exam 4: Price Controls

What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

Correct AnswerverifiedShow Answer

Do all buyers benefit from a binding price ceiling?

Correct AnswerverifiedShow Answer

Why do shortages develop under a binding price ceiling?

Correct AnswerverifiedShow Answer

What is a black market?

Correct AnswerverifiedShow Answer

Which of the following is a correct statement about a minimum wage law?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What will happen in a market where a nonbinding price ceiling is removed?

Correct AnswerverifiedShow Answer

Refer to the accompanying table to answer the next questions. -At what price level does the apartment market reach equilibrium?

Correct AnswerverifiedShow Answer

What will happen in a market where a binding price floor is removed?

Correct AnswerverifiedShow Answer

One strategy I might use to be elected mayor of a university town is to place a binding price ceiling on rent for student apartments. What will happen if I get elected and am able to pass such a law?

Correct AnswerverifiedShow Answer

The government has imposed a price control for many agricultural products in an effort to support farmers. In the case of price floor P2 in the accompanying figure, how much of a disequilibrium in quantity exists?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If you were a politician, why would you find it difficult to remove a binding price ceiling?

Correct AnswerverifiedShow Answer

Use the following information to answer the next questions. Market for used cars: Demand: Qd = 154,000 - 86 P Supply: Qs = -100 + 14 P -What would be the quantity demanded if a price ceiling is set at $1,000?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe government will generally intervene ...View AnswerShow Answer

As a seller of a product subject to a binding price floor, you would be better off in which of the following situations?

Correct AnswerverifiedShow Answer

If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?

Correct AnswerverifiedShow Answer

Refer to the accompanying table to answer the next questions. -At what price level does the apartment market experience its largest surplus?

Correct AnswerverifiedShow Answer

Refer to the accompanying figure for the next questions. -The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P3, predict the resulting surplus or shortage.

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

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
verified

Correct Answer
verified

The government has imposed a price control for many agricultural products in an effort to support farmers. In the case of price floor P₂ in the accompanying figure, how much of a disequilibrium in quantity exists?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Use the following information to answer the next questions. Market for used cars: Demand: Q_d = 154,000 - 86 P Supply: Q_s = -100 + 14 P -What would be the quantity demanded if a price ceiling is set at $1,000?

Correct Answer
verified

Correct Answer
verified
The government will generally intervene ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the accompanying figure for the next questions. -The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P₃, predict the resulting surplus or shortage.

Correct Answer
verified

Correct Answer
verified