Question 1

Refer to the accompanying figure to answer the questions that follow.
 
-At the price of the binding price floor,by how much would the quantity supplied change from the market equilibrium?

Accepted Answer

A)   The quantity supplied would increase by 32,000 units.
B)   The quantity supplied would decrease by 18,000 units.
C)   The quantity supplied would decrease by 30,500 units.
D)   The quantity supplied would increase by 30,500 units.
E)   The quantity supplied would decrease by 32,000 units.

Question 2

Suppose you live in a community with no price controls.What do you expect to happen if your town borders a community where there is a binding price floor on most products?

Accepted Answer

A)   Prices in the legal market in the community with a binding price floor would fall.
B)   There would be smaller surpluses in the community with a binding price floor.
C)   More consumers would purchase the product in the community without a price floor.
D)   The black market in the community with a binding price floor would be larger.
E)   Sales of the product in the community with a binding price floor would increase.

Question 3

A market has reached an efficient outcome when:

Accepted Answer

A)   producers are able to produce and sell as much as they like.
B)   total surplus is minimized.
C)   producer surplus is greater than consumer surplus.
D)   consumers are able to purchase as much as they like.
E)   total surplus is maximized.

Question 4

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 that triggered the law?

Accepted Answer

During an emergency,the demand for certa...

Question 5

Which of the following is true,holding all other things constant,when comparing regions that impose a higher minimum wage to regions that impose a lower minimum wage?

Accepted Answer

A)   In regions with the highest minimum wage, most of the jobs require low skills and workers are not productive enough to get paid the higher wage.
B)   In regions with the lowest minimum wage, most of the jobs require technical skills and no one works minimum wage jobs.
C)   In regions with the lowest minimum wage, the price control is non-binding; in the regions with the highest minimum wage, the price control is binding.
D)   In regions with the lowest minimum wage, the price control is binding; in the regions with the highest minimum wage, the price control is non-binding.
E)   In regions with the highest minimum wage, the minimum wage law is legally enforced; in regions with the lowest minimum wage, the law is not strongly enforced.

Question 6

Why is it often difficult to remove a binding price floor after it exists?

Accepted Answer

A)   in general, because consumers benefit from the lower prices and would lobby their elected officials to keep the price control
B)   in general, because consumers benefit from higher-quality products and would lobby their elected officials to keep the price control
C)   in general, because consumers benefit from larger products and would lobby their elected officials to keep the price control
D)   in general, because sellers benefit from higher prices and would lobby their elected officials to keep the price control
E)   in general, because it has little effect on the market price and people forget about it

Question 7

________ is a real-life example of a price floor.

Accepted Answer

A)   A minimum wage law
B)   Rent control
C)   A price gouging law
D)   A black market price
E)   A ration price

Question 8

Refer to the accompanying figure to answer the questions that follow.
 
-If there is a $60 price ceiling imposed on a textbook,what will be the disequilibrium amount?

Accepted Answer

A)   There will be a shortage of 800,000 textbooks.
B)   There will be a surplus of 800,000 textbooks.
C)   There will be neither a shortage nor a surplus.
D)   There will be a shortage of 2.6 million textbooks.
E)   There will be a shortage of 400,000 textbooks.

Question 9

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original,legal market price.What would be the positive and negative consequences to such a law?

Accepted Answer

The positive consequence would be for th...

Question 10

Bob is willing to pay $65 for a new pair of shoes.Bill is willing to pay $50 for the same shoes.The shoes have a price of $45.What is the total consumer surplus for Bob and Bill?

Accepted Answer

A)   $15
B)   $20
C)   $5
D)   $25
E)   $35

Question 11

When looking at a graph,the area above the supply curve and below market price is defined as:

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   producer benefit.
D)   business profit.
E)   revenue.

Question 12

What would be the quantity supplied if a price floor is set at $2,000?

Accepted Answer

A)   9,900
B)   200
C)   27,900
D)   1,541
E)   18,000

Question 13

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a non-binding price ceiling on most products?

Accepted Answer

A)   Legal market prices will rise in the community with a binding price ceiling.
B)   Legal market prices will fall in the community with a binding price ceiling.
C)   The price and the quantity sold in the community without a non-binding price ceiling will be the same as the price and quantity in the community with a non-binding price ceiling.
D)   There will be more shortages in the community with a binding price ceiling.
E)   The black market in the community with a binding price ceiling will not be strong because consumers will simply purchase the product in the community that has no price ceiling.

Question 14

Why are binding price ceiling laws passed?

Accepted Answer

A)   They make goods more expensive (and profitable)  for firms.
B)   They encourage sellers to produce more of a good.
C)   They encourage producers to sell higher-quality products.
D)   They permit customers to obtain higher-quality products.
E)   They make a good less expensive for those customers who are able to purchase the good in the legal market.

Question 15

Which of the following is a consequence of a non-binding price floor?

Accepted Answer

A)   There will be downward pressure on prices until quantity demanded equals quantity supplied.
B)   There will be upward pressure on prices until quantity demanded equals quantity supplied.
C)   There are no consequences to a non-binding price floor.
D)   The quantity demanded will always exceed the quantity supplied.
E)   The quantity demanded will always be smaller than the quantity supplied.

Question 16

The price-quantity combination found where the supply and demand curves intersect is a unique combination that is efficient because:

Accepted Answer

A)   producers can sell as much as they want.
B)   total surplus is maximized.
C)   revenue is sufficient to pay for business costs.
D)   consumers can buy as much as they want.
E)   new products are being introduced.

Question 17

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

Accepted Answer

A)   minimum wage law.
B)   fair wage law.
C)   price ceiling.
D)   black market price.
E)   ration price.

Question 18

As a politician,you would be more inclined to propose an increase in the minimum wage when you believe that the new minimum wage would:

Accepted Answer

A)   remain below the equilibrium wage and be binding.
B)   remain above the equilibrium wage and be binding.
C)   remain below the equilibrium wage and be non-binding.
D)   remain above the equilibrium wage and be non-binding.
E)   be equal to the equilibrium wage.

Question 19

MJM Products,Inc.,designs and sells flannel jackets.The company is willing to sell a men's flannel jacket for as little as $45.Its main competitor is RL Outriggers,which is willing to sell the same men's flannel jacket for as little as $40.The current market price of that type of jacket is $57.What is the total producer surplus for the two firms?

Accepted Answer

A)   $95
B)   $12
C)   $17
D)   $29
E)   $5

Question 20

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.

Exam 4: Market Efficiency

Refer to the accompanying figure to answer the questions that follow. -If there is a $60 price ceiling imposed on a textbook,what will be the disequilibrium amount?

Correct Answer
verified

Which of the following is a consequence of a non-binding price floor?

Correct Answer
verified

Why is it often difficult to remove a binding price floor after it exists?

Correct Answer
verified

Which of the following is true,holding all other things constant,when comparing regions that impose a higher minimum wage to regions that impose a lower minimum wage?

Correct Answer
verified

When looking at a graph,the area above the supply curve and below market price is defined as:

Correct Answer
verified

Suppose you live in a community with no price controls.What do you expect to happen if your town borders a community where there is a binding price floor on most products?

Correct Answer
verified

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original,legal market price.What would be the positive and negative consequences to such a law?

Correct Answer
verified
The positive consequence would be for th...
View Answer

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a non-binding price ceiling on most products?

Correct Answer
verified

As a politician,you would be more inclined to propose an increase in the minimum wage when you believe that the new minimum wage would:

Correct Answer
verified

Refer to the accompanying figure to answer the questions that follow. -At the price of the binding price floor,by how much would the quantity supplied change from the market equilibrium?

Correct Answer
verified

Bob is willing to pay $65 for a new pair of shoes.Bill is willing to pay $50 for the same shoes.The shoes have a price of $45.What is the total consumer surplus for Bob and Bill?

Correct Answer
verified

________ is a real-life example of a price floor.

Correct Answer
verified

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 that triggered the law?

Correct Answer
verified
During an emergency,the demand for certa...
View Answer

Correct Answer
verified

A market has reached an efficient outcome when:

Correct Answer
verified

What is the incentive to create a black market when a binding price ceiling exists?

Correct Answer
verified

Why are binding price ceiling laws passed?

Correct Answer
verified

The price-quantity combination found where the supply and demand curves intersect is a unique combination that is efficient because:

Correct Answer
verified

What would be the quantity supplied if a price floor is set at $2,000?

Correct Answer
verified

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

Correct Answer
verified

Exam 4: Market Efficiency

Refer to the accompanying figure to answer the questions that follow. -If there is a $60 price ceiling imposed on a textbook,what will be the disequilibrium amount?

Correct AnswerverifiedShow Answer

Which of the following is a consequence of a non-binding price floor?

Correct AnswerverifiedShow Answer

Why is it often difficult to remove a binding price floor after it exists?

Correct AnswerverifiedShow Answer

Which of the following is true,holding all other things constant,when comparing regions that impose a higher minimum wage to regions that impose a lower minimum wage?

Correct AnswerverifiedShow Answer

When looking at a graph,the area above the supply curve and below market price is defined as:

Correct AnswerverifiedShow Answer

Suppose you live in a community with no price controls.What do you expect to happen if your town borders a community where there is a binding price floor on most products?

Correct AnswerverifiedShow Answer

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original,legal market price.What would be the positive and negative consequences to such a law?

Correct AnswerverifiedThe positive consequence would be for th...View AnswerShow Answer

Suppose you live in a community with no price controls.What do you expect will happen if your town borders a community where there is a non-binding price ceiling on most products?

Correct AnswerverifiedShow Answer

As a politician,you would be more inclined to propose an increase in the minimum wage when you believe that the new minimum wage would:

Correct AnswerverifiedShow Answer

Refer to the accompanying figure to answer the questions that follow. -At the price of the binding price floor,by how much would the quantity supplied change from the market equilibrium?

Correct AnswerverifiedShow Answer

Bob is willing to pay $65 for a new pair of shoes.Bill is willing to pay $50 for the same shoes.The shoes have a price of $45.What is the total consumer surplus for Bob and Bill?

Correct AnswerverifiedShow Answer

________ is a real-life example of a price floor.

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 that triggered the law?

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

Correct AnswerverifiedShow Answer

A market has reached an efficient outcome when:

Correct AnswerverifiedShow Answer

What is the incentive to create a black market when a binding price ceiling exists?

Correct AnswerverifiedShow Answer

Why are binding price ceiling laws passed?

Correct AnswerverifiedShow Answer

The price-quantity combination found where the supply and demand curves intersect is a unique combination that is efficient because:

Correct AnswerverifiedShow Answer

What would be the quantity supplied if a price floor is set at $2,000?

Correct AnswerverifiedShow Answer

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families.The law that sets food prices low enough to meet these requirements would be an example of a:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The positive consequence would be for th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
During an emergency,the demand for certa...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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