Question 1

The minimum wage

Accepted Answer

A)  is an example of a price ceiling.
B)  has its greatest impact on middle-aged and immigrant workers.
C)  does not apply to unpaid internships.
D)  does not affect the quantity of labor demanded;it only affects the quantity of labor supplied.E) C) and D)
F) All of the above

Question 2

Consider the US market for chocolate,a market in which the government has imposed a price ceiling.Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Accepted Answer

A)  ​a government study that shows that consuming chocolate increases the incidence of cancer.
B)  ​a large increase in the size of the cocoa bean crop;cocoa beans are used to produce chocolate.
C)  ​South American cocoa bean producers refuse to ship to chocolate producers in the US.
D)  ​a sharp drop in consumer income;chocolate is a normal good.E) A) and B)
F) A) and C)

Question 3

If a binding price floor is imposed on the video game market,then

Accepted Answer

A)  the demand for video games will decrease.
B)  the supply of video games will increase.
C)  a surplus of video games will develop.
D)  All of the above are correct.E) All of the above
F) A) and B)

Question 4

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully,and they recognize that the price ceiling is advantageous for society as a whole.
B)  Buyers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling.
C)  Sellers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling.
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.E) All of the above
F) None of the above

Question 5

The minimum wage does not apply to

Accepted Answer

A)  jobs for teenagers.
B)  jobs for members of minority groups.
C)  unpaid internships.
D)  jobs that include on-the-job training.E) None of the above
F) C) and D)

Question 6

Figure 6-5 
-Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the solid horizontal line on the graph.If the price control is a price floor,then the price control

Accepted Answer

A)  causes the quantity demanded to decrease by 50 units,relative to the initial equilibrium.
B)  causes the quantity supplied to increase by 40 units,relative to the initial equilibrium.
C)  means that some firms will not be able to sell all that they want
D)  All of the above are correct.E) B) and C)
F) C) and D)

Question 7

Figure 6-10 
-Refer to Figure 6-10.A price floor set at

Accepted Answer

A)  $6 will be binding and will result in a surplus of 10 units.
B)  $6 will be binding and will result in a surplus of 6 units.
C)  $16 will be binding and will result in a surplus of 10 units.
D)  $16 will be binding and will result in a surplus of 4 units.E) C) and D)
F) All of the above

Question 8

If a price floor is not binding,then

Accepted Answer

A)  the equilibrium price is above the price floor.
B)  the equilibrium price is below the price floor.
C)  there will be a surplus in the market.
D)  there will be a shortage in the market.E) B) and C)
F) C) and D)

Question 9

Which of the following would not interfere with market equilibria?

Accepted Answer

A)  a minimum wage
B)  a rent control
C)  a non-binding price floor
D)  a binding price ceilingE) A) and B)
F) C) and D)

Question 10

Figure 6-6 
-Refer to Figure 6-6.In which of the following cases would sellers have to develop a rationing mechanism?

Accepted Answer

A)  a price ceiling set at $8
B)  a price ceiling set at $6
C)  a price floor set at $8
D)  a price floor set at $6E) C) and D)
F) B) and D)

Question 11

A price floor is

Accepted Answer

A)  a legal minimum on the price at which a good can be sold.
B)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.
C)  a source of inefficiency in a market.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 12

The minimum wage has its greatest impact on the market for

Accepted Answer

A)  female labor.
B)  older labor.
C)  black labor.
D)  teenage labor.E) B) and C)
F) A) and C)

Question 13

Figure 6-9 
-Refer to Figure 6-9.At which price would a price ceiling be binding?

Accepted Answer

A)  $8
B)  $5
C)  $6
D)  $7E) B) and D)
F) A) and C)

Question 14

If a nonbinding price floor is imposed on a market,then the

Accepted Answer

A)  quantity sold in the market will decrease.
B)  quantity sold in the market will stay the same.
C)  price in the market will increase.
D)  price in the market will decrease.E) C) and D)
F) B) and C)

Question 15

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent.
B)  higher taxes on rental income earned by landlords.
C)  a policy that prevents landlords from evicting tenants.
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.E) B) and C)
F) None of the above

Question 16

Figure 6-7 
-Refer to Figure 6-7.For a price floor to be binding in this market,it would have to be set at

Accepted Answer

A)  any price below $7.
B)  any price below $3.
C)  any price below $9.
D)  any price above $7.E) B) and D)
F) All of the above

Question 17

Figure 6-2 
-Refer to Figure 6-2.The price ceiling causes quantity

Accepted Answer

A)  supplied to exceed quantity demanded by 45 units.
B)  supplied to exceed quantity demanded by 85 units.
C)  demanded to exceed quantity supplied by 45 units.
D)  demanded to exceed quantity supplied by 85 units.E) A) and D)
F) C) and D)

Question 18

Figure 6-2 
-Refer to Figure 6-2.The price ceiling

Accepted Answer

A)  causes a shortage of 45 units of the good.
B)  makes it necessary for sellers to ration the good.
C)  is not binding because it is set below the equilibrium price.
D)  causes a shortage of 40 units of the good.E) A) and B)
F) None of the above

Question 19

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A)  encourages teenagers to drop out of school.
B)  prevents some workers from getting needed on-the-job training.
C)  contributes to the problem of unemployment.
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 20

Figure 6-14 
-Refer to Figure 6-14.If the horizontal line on the graph represents a price ceiling,then the price ceiling is

Accepted Answer

A)  binding and creates a shortage of 20 units of the good.
B)  binding and creates a shortage of 40 units of the good.
C)  not binding but creates a shortage of 40 units of the good.
D)  not binding,and there will be no surplus or shortage of the good.E) C) and D)
F) None of the above

Exam 6: Supply Demand and Government Policies: Controls on Prices

The minimum wage does not apply to

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Figure 6-7 -Refer to Figure 6-7.For a price floor to be binding in this market,it would have to be set at

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A price floor is

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Opponents of the minimum wage point out that the minimum wage

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An alternative to rent-control laws that would not reduce the quantity of housing supplied is

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If a price floor is not binding,then

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If a binding price floor is imposed on the video game market,then

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If a nonbinding price floor is imposed on a market,then the

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Consider the US market for chocolate,a market in which the government has imposed a price ceiling.Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

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Which of the following would not interfere with market equilibria?

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Figure 6-6 -Refer to Figure 6-6.In which of the following cases would sellers have to develop a rationing mechanism?

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Figure 6-2 -Refer to Figure 6-2.The price ceiling

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Figure 6-5 -Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the solid horizontal line on the graph.If the price control is a price floor,then the price control

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The minimum wage

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Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

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The minimum wage has its greatest impact on the market for

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Figure 6-14 -Refer to Figure 6-14.If the horizontal line on the graph represents a price ceiling,then the price ceiling is

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Figure 6-2 -Refer to Figure 6-2.The price ceiling causes quantity

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Figure 6-10 -Refer to Figure 6-10.A price floor set at

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Figure 6-9 -Refer to Figure 6-9.At which price would a price ceiling be binding?

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