Question 1

Use the following to answer questions: Figure: Supply and Demand 4 
-(Figure: Supply and Demand 4)  Refer to the figure. If the good is purchased by those with the highest willingness to pay, what is the value of consumer surplus in the figure at the price ceiling of $8?

Accepted Answer

A)   $54
B)   $136
C)   $36
D)   $45

Question 2

Rent controls create all of the following EXCEPT:

Accepted Answer

A)   shortages.
B)   search costs.
C)   wasteful quality increases.
D)   resource misallocations.

Question 3

The blat economy described in the text results when price controls are:

Accepted Answer

A)   extensive and cause chronic shortages in the economy.
B)   extensive but the causes of shortages in the economy are only temporary.
C)   short-lasting but cause chronic shortages in the economy.
D)   short-lasting and cause only temporary shortages in the economy.

Question 4

The U.S. Congress first instituted the minimum wage in:

Accepted Answer

A)  1914.
B)  1974.
C)  1938.
D)  1925.

Question 5

Use the following to answer questions: Figure: Price Ceilings and Random Allocation 
-(Figure: Price Ceilings and Random Allocation)  Refer to the figure. When a controlled price is imposed and the quantity of goods is allocated randomly between the highest-valued uses and lowest-valued uses, loss due to random allocation instead of allocation to the highest-valued use is represented by area:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.

Question 6

Prices ceilings misallocate resources because with them resources are not necessarily allocated to their highest-valued use.

Accepted Answer

A) True 
 B)False

Question 7

Which scenario shows how the Russian concept of blat works during a beef shortage?

Accepted Answer

A)   a politician acquires some steak through his friendship with the owner of the beef factory
B)   a beef factory owner hoards some steak at his own house
C)   a beef factory owner realizes that there is a surplus of plastic wrapping
D)   more people than usual stand in line to try to buy steak

Question 8

A price ceiling is a legal maximum on the price of the good or service.

Accepted Answer

A) True 
 B)False

Question 9

Which statement would be the least likely result of rent controls?

Accepted Answer

A)   Landlords are more selective with respect to the people they rent apartments to.
B)   Landlords provide less maintenance on the apartments.
C)   More new apartments are available for rent.
D)   More people look for apartments for rent than the number of apartments available.

Question 10

Which observation would be consistent with the impact of price ceilings?

Accepted Answer

A)   Books are printed on higher-quality paper.
B)   Full-service gasoline stations stay open for 24 hours.
C)   New automobiles are painted with more coats of paint.
D)   Newspapers switch to a smaller font size in order to decrease bulk.

Question 11

A price ceiling is a(n) :

Accepted Answer

A)   legally established minimum price that can be charged for a good.
B)   illegally established minimum price that can be charged for a good.
C)   legally established maximum price that can be charged for a good.
D)   illegally established maximum price that can be charged for a good.

Question 12

Which statement about price ceilings is correct?

Accepted Answer

A)   Whether a price ceiling is placed below or above the equilibrium price, it will always cause deadweight loss.
B)   A price ceiling will only cause deadweight loss if it is placed above the equilibrium price.
C)   A price ceiling will only cause deadweight loss if it is placed below the equilibrium price.
D)   Whether a price ceiling is placed below or above the equilibrium price, it will always cause a shortage of the good.

Question 13

When a price ceiling is binding, the goods that are on sale are allocated to buyers using a method:

Accepted Answer

A)   of random allocation.
B)   whereby the highest bidder wins.
C)   whereby the lowest bidder wins.
D)   whereby buyers purchase lottery tickets to see who will be able to buy the product.

Question 14

Do price ceilings misallocate resources?

Accepted Answer

A)   Yes, because people who value the good the most are unable to bid it away from low-valued uses.
B)   Yes, because people who value the good the least are unable to afford the good.
C)   No, because the good is still allocated based on willingness to pay.
D)   No, because the rich and poor alike stand an equal chance of getting the good.

Question 15

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 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

Use the following to answer questions: Figure: Labor Market 1 
-(Figure: Labor Market 1)  Refer to the figure. If there is a price ceiling set at $6, how much shortage or surplus, if any, is there?

Accepted Answer

A)   60 million hours
B)   80 million hours
C)   120 million hours
D)   There is no shortage and no surplus.

Question 18

If, under price control, quantity supplied equals 50 units and quantity demanded equals 40 units, then the price control is a __________.

Accepted Answer

A)   binding price ceiling
B)   binding price floor
C)   nonbinding price ceiling
D)   nonbinding price floor

Question 19

Deregulation improves the allocation of resources by:

Accepted Answer

A)   allocating more resources to the firms.
B)   decreasing the number of firms in the market.
C)   allowing low-cost, innovative firms to enter the market.
D)   creating more market opportunities to the firms.

Question 20

When a crisis in the Middle East reduces the supply of oil, the price system rationally responds by reallocating oil from highest-value uses to lower-valued uses.

Accepted Answer

A) True 
 B)False

Exam 5: Price Ceilings and Floors

A price ceiling is a legal maximum on the price of the good or service.

Correct Answer
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Use the following to answer questions: Figure: Supply and Demand 4 -(Figure: Supply and Demand 4) Refer to the figure. If the good is purchased by those with the highest willingness to pay, what is the value of consumer surplus in the figure at the price ceiling of $8?

Correct Answer
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Which statement about price ceilings is correct?

Correct Answer
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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
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The blat economy described in the text results when price controls are:

Correct Answer
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Correct Answer
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A price ceiling is a(n) :

Correct Answer
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Deregulation improves the allocation of resources by:

Correct Answer
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When a price ceiling is binding, the goods that are on sale are allocated to buyers using a method:

Correct Answer
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Do price ceilings misallocate resources?

Correct Answer
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Which observation would be consistent with the impact of price ceilings?

Correct Answer
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Prices ceilings misallocate resources because with them resources are not necessarily allocated to their highest-valued use.

Correct Answer
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Which statement would be the least likely result of rent controls?

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

Correct Answer
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Which scenario shows how the Russian concept of blat works during a beef shortage?

Correct Answer
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When a crisis in the Middle East reduces the supply of oil, the price system rationally responds by reallocating oil from highest-value uses to lower-valued uses.

Correct Answer
verified

Rent controls create all of the following EXCEPT:

Correct Answer
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Use the following to answer questions: Figure: Labor Market 1 -(Figure: Labor Market 1) Refer to the figure. If there is a price ceiling set at $6, how much shortage or surplus, if any, is there?

Correct Answer
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If, under price control, quantity supplied equals 50 units and quantity demanded equals 40 units, then the price control is a __________.

Correct Answer
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The U.S. Congress first instituted the minimum wage in:

Correct Answer
verified

Exam 5: Price Ceilings and Floors

A price ceiling is a legal maximum on the price of the good or service.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Supply and Demand 4 -(Figure: Supply and Demand 4) Refer to the figure. If the good is purchased by those with the highest willingness to pay, what is the value of consumer surplus in the figure at the price ceiling of $8?

Correct AnswerverifiedShow Answer

Which statement about price ceilings is correct?

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

The blat economy described in the text results when price controls are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A price ceiling is a(n) :

Correct AnswerverifiedShow Answer

Deregulation improves the allocation of resources by:

Correct AnswerverifiedShow Answer

When a price ceiling is binding, the goods that are on sale are allocated to buyers using a method:

Correct AnswerverifiedShow Answer

Do price ceilings misallocate resources?

Correct AnswerverifiedShow Answer

Which observation would be consistent with the impact of price ceilings?

Correct AnswerverifiedShow Answer

Prices ceilings misallocate resources because with them resources are not necessarily allocated to their highest-valued use.

Correct AnswerverifiedShow Answer

Which statement would be the least likely result of rent controls?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which scenario shows how the Russian concept of blat works during a beef shortage?

Correct AnswerverifiedShow Answer

When a crisis in the Middle East reduces the supply of oil, the price system rationally responds by reallocating oil from highest-value uses to lower-valued uses.

Correct AnswerverifiedShow Answer

Rent controls create all of the following EXCEPT:

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Labor Market 1 -(Figure: Labor Market 1) Refer to the figure. If there is a price ceiling set at $6, how much shortage or surplus, if any, is there?

Correct AnswerverifiedShow Answer

If, under price control, quantity supplied equals 50 units and quantity demanded equals 40 units, then the price control is a __________.

Correct AnswerverifiedShow Answer

The U.S. Congress first instituted the minimum wage in:

Correct AnswerverifiedShow Answer

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