Question 1

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

Accepted Answer

A)   minimum wage will create a surplus of unskilled labor.
B)   minimum wage will create a shortage of unskilled labor.
C)   minimum wage will not impact the unskilled labor market.
D)   unskilled labor market will change,but we cannot be certain how.

Question 2

In the market for a given product,when a price floor is set above the equilibrium price the result will be

Accepted Answer

A)   more exchanges made in the market.
B)   an increase in the supply of the product.
C)   a decrease in the demand for the product.
D)   a deadweight loss.

Question 3

Exhibit 4-8 F.What is the size of the producers' surplus at PF? A)  area 2 + 3 + 4 + 5 B)  area 2 + 3 C)  area 4 D)  area 6" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the producers' surplus at PF?

Accepted Answer

A)   area 2 + 3 + 4 + 5
B)   area 2 + 3
C)   area 4
D)   area 6

Question 4

The minimum wage is an example of a

Accepted Answer

A)   price door.
B)   price wall.
C)   price floor.
D)   price ceiling.

Question 5

Which of the following would not result from a price ceiling (set below equilibrium price) ?

Accepted Answer

A)   a shortage
B)   fewer exchanges
C)   an increase in supply
D)   nonprice rationing devices

Question 6

Exhibit 4-6 
-Refer to Exhibit 4-6.Suppose the minimum wage is set at $7.The result will be

Accepted Answer

A)   a surplus of unskilled workers.
B)   a shortage of unskilled workers.
C)   no effect on the market for unskilled labor.
D)   none of the above

Question 7

Exhibit 4-3 1 is a price ceiling,the maximum (per-unit) amount buyers are willing to pay to purchase Q1 units is A)  P1. B)  P2. C)  P3. D)  P1 + P2. E)  P3 - P1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-3.If P1 is a price ceiling,the maximum (per-unit) amount buyers are willing to pay to purchase Q1 units is

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P1 + P2.
E)   P3 - P1.

Question 8

Exhibit 4-4 2 would not have an impact on the market. B)  Graph (2) : As supply increases,equilibrium price remains constant. C)  Graph (3) : As demand increases,equilibrium quantity remains constant. D)  Graph (4) : As supply increases,equilibrium quantity increases." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-4.Which of the following is false?

Accepted Answer

A)   Graph (1) : A price ceiling set at P2 would not have an impact on the market.
B)   Graph (2) : As supply increases,equilibrium price remains constant.
C)   Graph (3) : As demand increases,equilibrium quantity remains constant.
D)   Graph (4) : As supply increases,equilibrium quantity increases.

Question 9

There is currently a price floor in the market for transplanted kidneys,which has helped to create a shortage of transplanted kidneys.

Accepted Answer

A) True 
 B)False

Question 10

When the price of a good rises,the price is transmitting information indicating that the good is relatively

Accepted Answer

A)   scarcer.
B)   less scarce.
C)   more plentiful in supply.
D)   b and c

Question 11

One of the effects of a price floor (set above equilibrium price) is

Accepted Answer

A)   a surplus.
B)   higher-quality goods are produced.
C)   more satisfied customers.
D)   all of the above
E)   none of the above

Question 12

-Refer to Situation 4-1.An economist would predict that the oil embargo imposed in 1974 would result in a

Accepted Answer

A)   leftward shift in the supply (curve) of gasoline.
B)   rightward shift in the supply (curve) of gasoline.
C)   leftward shift in the demand (curve) for gasoline.
D)   rightward shift in the demand (curve) for gasoline.
E)   both a and d

Question 13

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true?

Accepted Answer

A)   Buyers always prefer lower prices to higher prices.
B)   Buyers never prefer lower prices to higher prices.
C)   Buyers rarely prefer lower prices to higher prices.
D)   Buyers prefer lower prices to higher prices,ceteris paribus.

Question 15

A shortage of kidneys (for transplants) results from

Accepted Answer

A)   the legal price being set below equilibrium.
B)   the legal price being set above equilibrium.
C)   a price floor being set in the kidney market at P = $0,assuming the equilibrium price is greater than $0.
D)   a price ceiling being set in the kidney market at P = $0,assuming the equilibrium price is greater than $0.
E)   a and d

Question 16

Which of the following is false?

Accepted Answer

A)   In 1965 and 1969 the U.S.federal government imposed price ceilings on gasoline.
B)   When the government imposed price ceilings on gasoline in the U.S. ,the result was a shortage of gasoline.
C)   If a price ceiling is imposed (below the equilibrium price) in a given market,the result is a shortage in that market.
D)   First-come-first-served is a commonly used rationing device.

Question 17

In 1973 and 1979,the U.S.federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 4-8 
-Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the total surplus will equal

Accepted Answer

A)   area 1 + 2 + 3 + 4 + 5
B)   area 1 + 2 + 3
C)   area 2 + 3 + 4 + 5
D)   area 4 + 5

Question 19

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Accepted Answer

In order for a price floor to ...

Question 20

-Refer to Situation 4-1.If no price controls had been in place,the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been

Accepted Answer

A)   an increase in both price and quantity.
B)   an increase in price and a decrease in quantity.
C)   a decrease in price and an increase in quantity.
D)   a decrease in both price and quantity.

Exam 4: Prices: Free, controlled, and Relative

Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the producers' surplus at PF?

Correct AnswerverifiedShow Answer

-Refer to Situation 4-1.If no price controls had been in place,the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been

Correct AnswerverifiedShow Answer

When the price of a good rises,the price is transmitting information indicating that the good is relatively

Correct AnswerverifiedShow Answer

In the market for a given product,when a price floor is set above the equilibrium price the result will be

Correct AnswerverifiedShow Answer

In 1973 and 1979,the U.S.federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Correct AnswerverifiedShow Answer

Which of the following would not result from a price ceiling (set below equilibrium price) ?

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Exhibit 4-3 -Refer to Exhibit 4-3.If P1 is a price ceiling,the maximum (per-unit) amount buyers are willing to pay to purchase Q1 units is

Correct AnswerverifiedShow Answer

One of the effects of a price floor (set above equilibrium price) is

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-Refer to Situation 4-1.An economist would predict that the oil embargo imposed in 1974 would result in a

Correct AnswerverifiedShow Answer

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

Correct AnswerverifiedShow Answer

There is currently a price floor in the market for transplanted kidneys,which has helped to create a shortage of transplanted kidneys.

Correct AnswerverifiedShow Answer

Exhibit 4-6 -Refer to Exhibit 4-6.Suppose the minimum wage is set at $7.The result will be

Correct AnswerverifiedShow Answer

A shortage of kidneys (for transplants) results from

Correct AnswerverifiedShow Answer

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Correct AnswerverifiedIn order for a price floor to ...View AnswerShow Answer

If the minimum wage law sets a price floor above the equilibrium wage in the market for unskilled labor,then the

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Which of the following is true?

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Exhibit 4-8 -Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the total surplus will equal

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Exhibit 4-4 -Refer to Exhibit 4-4.Which of the following is false?

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The minimum wage is an example of a

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Which of the following is false?

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Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at P_F.What is the size of the producers' surplus at P_F?

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Exhibit 4-3 -Refer to Exhibit 4-3.If P₁ is a price ceiling,the maximum (per-unit) amount buyers are willing to pay to purchase Q₁ units is

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In order for a price floor to ...
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