Question 1

Which of the below is true?

Accepted Answer

A)   A price ceiling reduces the quantity exchanged on the market, but a price floor increases the quantity exchanged on the market.
B)   A price ceiling increases the quantity exchanged on the market, but a price floor decreases the quantity exchanged on the market.
C)   Both price floors and price ceilings reduce the quantity exchanged in the market.
D)   Both price floors and price ceilings increase the quantity exchanged in the market.

Question 2

The imposition of a binding price ceiling on a market causes quantity demanded to be

Accepted Answer

A)   greater than quantity supplied.
B)   less than quantity supplied.
C)   equal to quantity supplied.
D)   Both (a)  and (b)  are possible.

Question 3

In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10.Which of the following explanations is most consistent with these facts?

Accepted Answer

A)   Intense competition in the calculator industry caused the supply curve for calculators to shift to the left, depressing the price.
B)   An increase in the demand for calculators led to the price drop.
C)   An improvement in technology caused the supply of calculators to increase, depressing their price.
D)   As the population grew, fewer expensive calculators were needed, causing prices to fall.

Question 4

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)   results in a surplus.
B)   is set above the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.

Question 5

Assuming that the demand and supply of a good have moved in the same direction,and by the same amount,the new equilibrium would represent:

Accepted Answer

A)   an increase in price and an increase in quantity exchanged.
B)   no change in price and an increase in quantity exchanged.
C)   a decrease in price and a decrease in quantity exchanged.
D)   no change in price, and an indeterminate change in quantity exchanged.

Question 6

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases:

Accepted Answer

A)   a surplus of lettuce will be created.
B)   a shortage of lettuce will be created.
C)   the quantity of lettuce traded remains the same.
D)   the quantity of lettuce supplied will increase.

Question 7

A non-binding price ceiling
i.causes a surplus.
ii.causes a shortage.
iii.is set at a price above the equilibrium price.
iv.is set at a price below the equilibrium price.

Accepted Answer

A)   (i)  only
B)   (iii)  only
C)   (i)  and (iii)  only
D)   (ii)  and (iv)  only

Question 8

Exhibit 5-1 The diagram below represents the market for butter.  Refer to Exhibit 5-1.If a price ceiling of $4 is imposed,we would expect that ____ units of butter will be sold.

Accepted Answer

A)   7,000
B)   5,000
C)   4,000
D)   3,000

Question 9

Exhibit 5-5  Refer to Exhibit 5-5.The movement from ____ to ____ is consistent with a decrease in the price of cotton (a substitute) .

Accepted Answer

A)   Point A; Point B
B)   Point A; Point F
C)   Point A; Point D
D)   Point A; Point H

Question 10

If the price of ice cream increases substantially (ceteris paribus) ,the equilibrium quantity of hot fudge sauce,a complement,is likely to:

Accepted Answer

A)   increase, and the equilibrium price is likely to decrease.
B)   increase, and the equilibrium price is likely to increase.
C)   decrease, and the equilibrium price is likely to decrease.
D)   decrease, and the equilibrium price is likely to increase.

Question 11

In general,an increase in price could be caused by either:

Accepted Answer

A)   an increase in demand or a decrease in supply.
B)   an increase in demand or an increase in supply.
C)   a decrease in demand or an increase in supply.
D)   an increase in demand or an increase in supply

Question 12

A shortage results when a

Accepted Answer

A)   nonbinding price ceiling is imposed on a market.
B)   nonbinding price ceiling is removed from a market.
C)   binding price ceiling is imposed on a market.
D)   binding price ceiling is removed from a market.

Question 13

If the demand for apples increases at the same time the supply of apples falls,the price of apples will tend to fall.

Accepted Answer

A) True 
 B)False

Question 14

An increase in demand for a product and a reduction in the costs of production would:

Accepted Answer

A)   increase the equilibrium quantity and increase the equilibrium price.
B)   increase the equilibrium quantity and decrease the equilibrium price.
C)   increase the equilibrium quantity and cause an indeterminate change in the equilibrium price.
D)   decrease the equilibrium quantity and cause an indeterminate change in the equilibrium price.

Question 15

Exhibit 5-2 1 to S3 could occur if: A)  there is a decrease in the price of submarine sandwiches. B)  there is an increase in price of ingredients such tomatoes and pickles C)  there is a decrease in price of hamburgers, a substitute to submarine sandwiches D)  the price of bread used to make submarine sandwiches decreases" class="answers-bank-image d-inline" rel="preload" > Refer to Exhibit 5-2.A movement from S1 to S3 could occur if:

Accepted Answer

A)   there is a decrease in the price of submarine sandwiches.
B)   there is an increase in price of ingredients such tomatoes and pickles
C)   there is a decrease in price of hamburgers, a substitute to submarine sandwiches
D)   the price of bread used to make submarine sandwiches decreases

Question 16

Suppose there is a reduction in consumer income and an increase in the price of jet fuel,an important resource used to produce air travel.If air travel is a normal good,how will these changes influence the price and quantity of air travel? The price of air travel will (be) ____ and quantity purchased will (be) ____.

Accepted Answer

A)   decrease; indeterminate
B)   increase; indeterminate
C)   decrease; decrease
D)   indeterminate; decrease

Question 17

Which of the following is not likely to result from an increase in the federal minimum wage?

Accepted Answer

A)   an increase in the quantity of low-skilled labor supplied
B)   a decrease in the quantity of low-skilled labor demanded
C)   a decrease in teenage unemployment
D)   an increase in teenage unemployment

Question 18

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
2 and S1 are the prevailing demand and supply curves for a product.If the supply schedule changes from S1 to S2,then: A)  equilibrium price decreases from $10 to $8. B)  equilibrium quantity decreases from 15 to 12. C)  equilibrium quantity increases from 10 to 12. D)  equilibrium price increases from $10 to $12." class="answers-bank-image d-inline" rel="preload" > Refer to Exhibit 5-3.Suppose that D2 and S1 are the prevailing demand and supply curves for a product.If the supply schedule changes from S1 to S2,then:

Accepted Answer

A)   equilibrium price decreases from $10 to $8.
B)   equilibrium quantity decreases from 15 to 12.
C)   equilibrium quantity increases from 10 to 12.
D)   equilibrium price increases from $10 to $12.

Question 19

An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply.

Accepted Answer

A) True 
 B)False

Question 20

If a price ceiling is not binding,then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Exam 5: Markets in Motion and Price Controls

If the price of ice cream increases substantially (ceteris paribus) ,the equilibrium quantity of hot fudge sauce,a complement,is likely to:

Correct Answer
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To say that a price ceiling is binding is to say that the price ceiling

Correct Answer
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In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10.Which of the following explanations is most consistent with these facts?

Correct Answer
verified

If a price ceiling is not binding,then it will have no effect on the market.

Correct Answer
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Exhibit 5-2 Refer to Exhibit 5-2.A movement from S₁ to S₃ could occur if:

Correct Answer
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A non-binding price ceiling i.causes a surplus. ii.causes a shortage. iii.is set at a price above the equilibrium price. iv.is set at a price below the equilibrium price.

Correct Answer
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If the demand for apples increases at the same time the supply of apples falls,the price of apples will tend to fall.

Correct Answer
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The imposition of a binding price ceiling on a market causes quantity demanded to be

Correct Answer
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An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply.

Correct Answer
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Correct Answer
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Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases:

Correct Answer
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Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D₂ and S₁ are the prevailing demand and supply curves for a product.If the supply schedule changes from S₁ to S₂,then:

Correct Answer
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Assuming that the demand and supply of a good have moved in the same direction,and by the same amount,the new equilibrium would represent:

Correct Answer
verified

Exhibit 5-1 The diagram below represents the market for butter. Refer to Exhibit 5-1.If a price ceiling of $4 is imposed,we would expect that ____ units of butter will be sold.

Correct Answer
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Which of the following is not likely to result from an increase in the federal minimum wage?

Correct Answer
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A shortage results when a

Correct Answer
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Exhibit 5-5 Refer to Exhibit 5-5.The movement from to is consistent with a decrease in the price of cotton (a substitute) .

Correct Answer
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An increase in demand for a product and a reduction in the costs of production would:

Correct Answer
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Which of the below is true?

Correct Answer
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In general,an increase in price could be caused by either:

Correct Answer
verified

Exam 5: Markets in Motion and Price Controls

If the price of ice cream increases substantially (ceteris paribus) ,the equilibrium quantity of hot fudge sauce,a complement,is likely to:

Correct AnswerverifiedShow Answer

To say that a price ceiling is binding is to say that the price ceiling

Correct AnswerverifiedShow Answer

In 1975 a pocket calculator cost more than $50; in 1990 a calculator of the same quality cost less than $10.Which of the following explanations is most consistent with these facts?

Correct AnswerverifiedShow Answer

If a price ceiling is not binding,then it will have no effect on the market.

Correct AnswerverifiedShow Answer

Exhibit 5-2 Refer to Exhibit 5-2.A movement from S1 to S3 could occur if:

Correct AnswerverifiedShow Answer

A non-binding price ceiling i.causes a surplus. ii.causes a shortage. iii.is set at a price above the equilibrium price. iv.is set at a price below the equilibrium price.

Correct AnswerverifiedShow Answer

If the demand for apples increases at the same time the supply of apples falls,the price of apples will tend to fall.

Correct AnswerverifiedShow Answer

The imposition of a binding price ceiling on a market causes quantity demanded to be

Correct AnswerverifiedShow Answer

An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases:

Correct AnswerverifiedShow Answer

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D2 and S1 are the prevailing demand and supply curves for a product.If the supply schedule changes from S1 to S2,then:

Correct AnswerverifiedShow Answer

Assuming that the demand and supply of a good have moved in the same direction,and by the same amount,the new equilibrium would represent:

Correct AnswerverifiedShow Answer

Exhibit 5-1 The diagram below represents the market for butter. Refer to Exhibit 5-1.If a price ceiling of $4 is imposed,we would expect that ____ units of butter will be sold.

Correct AnswerverifiedShow Answer

Which of the following is not likely to result from an increase in the federal minimum wage?

Correct AnswerverifiedShow Answer

A shortage results when a

Correct AnswerverifiedShow Answer

Exhibit 5-5 Refer to Exhibit 5-5.The movement from ____ to ____ is consistent with a decrease in the price of cotton (a substitute) .

Correct AnswerverifiedShow Answer

An increase in demand for a product and a reduction in the costs of production would:

Correct AnswerverifiedShow Answer

Which of the below is true?

Correct AnswerverifiedShow Answer

In general,an increase in price could be caused by either:

Correct AnswerverifiedShow Answer

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Exhibit 5-2 Refer to Exhibit 5-2.A movement from S₁ to S₃ could occur if:

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Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.Suppose that D₂ and S₁ are the prevailing demand and supply curves for a product.If the supply schedule changes from S₁ to S₂,then:

Correct Answer
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Exhibit 5-5 Refer to Exhibit 5-5.The movement from to is consistent with a decrease in the price of cotton (a substitute) .

Correct Answer
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