Question 1

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

Accepted Answer

A)  area 1 + 2 + 3
B)  area 1 + 2 + 4
C)  area 3 + 5
D)  area 1 + 2 + 3 + 4 + 5
E)  area 6

Question 2

A price floor set above the equilibrium price will

Accepted Answer

A)  clear the market for the good.
B)  result in a shortage of the good.
C)  result in a surplus of the good.
D)  force some firms in this industry to go out of business.

Question 3

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 4

Exhibit 4-9  Refer to Exhibit 4-9.  Suppose that the government imposes a price ceiling at a price of $11.  How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?

Accepted Answer

A)  50
B)  30
C)  40
D)  70

Question 5

If the price of good X is $30 and the price of good Y is $5, it follows that the relative price of one unit of good X is approximately_____________ unit(s) of good Y.

Accepted Answer

A)  6.00
B)  2.00
C)  0.75
D)  0.25
E)  0.50

Question 6

Exhibit 4-1 
Refer to Exhibit 4-1. Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

Accepted Answer

A)  $7 is closer to the equilibrium price and buyers prefer equilibrium prices to all others.
B)  they think it is only fair for sellers to receive higher prices.
C)  they want to increase their chances of buying a good for which there is a shortage.
D)  it is customary to pay more than the price ceiling.

Question 7

​Exhibit 4-11  Refer to Exhibit 4-11.  Suppose that the government imposes a price floor in the market for good ABC at a price of $7. How many fewer units would be bought and sold at the price floor compared to the number of units that would be bought and sold in a free market?

Accepted Answer

A)  20
B)  30
C)  40
D)  60
E)  80

Question 8

Suppose the government imposes a price ceiling above the equilibrium price of a given good. Which of the following is the most likely result?

Accepted Answer

A)  Some other rationing device will emerge to allocate the good among buyers.
B)  Some buyers and sellers will be willing to risk breaking the law in order to exchange the good at a price above the equilibrium price since there would be a shortage of the good at the price ceiling.
C)  No change will occur in the market.
D)   Brute force will be used to allocate the good among buyers.
E)  a, b, and d

Question 9

​Exhibit 4-11  Refer to Exhibit 4-11.  Suppose that the government imposes a price floor in the market for good ABC at a price of $7.  The result of the price floor would be a ____________ of ______ units of good ABC.

Accepted Answer

A)  shortage; 110
B)  surplus; 110
C)  shortage; 30
D)  surplus; 30

Question 10

A price floor (set above the equilibrium price) on rice will

Accepted Answer

A)  force otherwise profitable farmers out of business.
B)  result in a shortage of rice.
C)  result in a surplus of rice.
D)  clear the market for rice.

Question 11

If the minimum wage law sets a wage floor below 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 12

Exhibit 4-3 1 is set as a price ceiling, the price ceiling will have an effect on the market for good X. B) If price P1 is set as a price floor, the price floor will have an effect on the market for good X. C) Price P1 is the equilibrium price for good X. D) If price P1 is set as a price floor, then it is the highest price that can legally be charged in the market for good X." class="answers-bank-image d-inline" rel="preload" >
Refer to Exhibit 4-3. Which of the following is true?

Accepted Answer

A)  If price P1 is set as a price ceiling, the price ceiling will have an effect on the market for good X.
B)  If price P1 is set as a price floor, the price floor will have an effect on the market for good X.
C)  Price P1 is the equilibrium price for good X.
D)  If price P1 is set as a price floor, then it is the highest price that can legally be charged in the market for good X.

Question 13

Exhibit 4-9  Refer to Exhibit 4-9.  Suppose that the government imposes a price ceiling at a price of $10.  _________ units would be exchanged in a free market, and ____________ units would be exchanged with the price ceiling in effect.

Accepted Answer

A)  150; 220
B)  150; 70
C)  110; 180
D)  150; 90

Question 14

If the absolute price of a car is $20,000 and the relative price of a computer is 20 cars, it follows that the absolute price of a car is

Accepted Answer

A)  $400.
B)  $4,000.
C)  $100.
D)  $1,000.

Question 15

Exhibit 4-3 1 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. 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 16

Exhibit 4-10 ​
​

Unskilled Labor Market
​
​
Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. The minimum wage will result in a ___________ of ________ thousand unskilled workers.

Accepted Answer

A)  shortage; 2
B)  shortage; 3
C)  surplus; 2
D)  surplus; 3

Question 17

Which of the following statements is true?

Accepted Answer

A)  Price ceilings set below the equilibrium price cause shortages.
B)  Surpluses result when a price floor is set below the equilibrium price.
C)  Price ceililngs set above the equilibrium price cause surpluses.
D)  Price ceilings are set by the market and price floors are set by the government.

Question 18

Exhibit 4-8 F.  What is the quantity of wheat purchased at PF? A) Q1 B) Q2 C) Q3 D) Q2 - Q1" 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 quantity of wheat purchased at PF?

Accepted Answer

A)  Q1
B)  Q2
C)  Q3
D)  Q2 - Q1

Question 19

When the price of a good falls, the price is transmitting information indicating that the good has become relatively

Accepted Answer

A)  scarcer.
B)  less scarce.
C)  more plentiful in demand.
D)  relatively more abundant.

Question 20

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

Accepted Answer

A) True 
 B)False

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 quantity of wheat purchased at PF?

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Exhibit 4-1 Refer to Exhibit 4-1. Some buyers will offer sellers $7 per unit instead of the $6 price ceiling because

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Suppose the government imposes a price ceiling above the equilibrium price of a given good. Which of the following is the most likely result?

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A price floor set above the equilibrium price will

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​Exhibit 4-11 Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. The result of the price floor would be a ____________ of ______ units of good ABC.

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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 4-9 Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $11. How many fewer units would be exchanged at the price ceiling than would be exchanged at the equilibrium price?

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Which of the following statements is true?

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​Exhibit 4-11 Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. How many fewer units would be bought and sold at the price floor compared to the number of units that would be bought and sold in a free market?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the price of a good falls, the price is transmitting information indicating that the good has become relatively

Correct AnswerverifiedShow Answer

Exhibit 4-9 Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. _________ units would be exchanged in a free market, and ____________ units would be exchanged with the price ceiling in effect.

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If the absolute price of a car is $20,000 and the relative price of a computer is 20 cars, it follows that the absolute price of a car is

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Exhibit 4-3 Refer to Exhibit 4-3. The maximum (per-unit) amount buyers are willing to pay to purchase Q1 units is

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A price floor (set above the equilibrium price) on rice will

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

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Exhibit 4-10 ​ ​ Unskilled Labor Market ​ ​ Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. The minimum wage will result in a ___________ of ________ thousand unskilled workers.

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If the price of good X is $30 and the price of good Y is $5, it follows that the relative price of one unit of good X is approximately_____________ unit(s) of good Y.

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Exhibit 4-3 Refer to Exhibit 4-3. Which of the following is true?

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A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

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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 quantity of wheat purchased at P_F?

Correct Answer
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Exhibit 4-11 Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. The result of the price floor would be a ______ of units of good ABC.

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Exhibit 4-11 Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. How many fewer units would be bought and sold at the price floor compared to the number of units that would be bought and sold in a free market?

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Exhibit 4-9 Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. _ units would be exchanged in a free market, and ____ units would be exchanged with the price ceiling in effect.

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Exhibit 4-3 Refer to Exhibit 4-3. The maximum (per-unit) amount buyers are willing to pay to purchase Q₁ units is

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Exhibit 4-10 Unskilled Labor Market Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. The minimum wage will result in a ___ of thousand unskilled workers.

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