Question 1

The town of Fairness has a law stating that wages should be high enough to ensure that all people can afford to buy enough food for their families.The law that sets wages 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 2

Use the following table to answer the following questions.
 
-What is the surplus when the price floor is $0.75 in the market for public transportation?

Accepted Answer

A)   100,000
B)   86,000
C)   75,000
D)   116,000
E)   0 (zero)

Question 3

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 4

An example of a binding price ceiling is ________ the equilibrium price.

Accepted Answer

A)   a minimum wage law that is set above
B)   rent control that is set above
C)   a black market that sets the price below
D)   a minimum wage law that is set below
E)   rent control that is set below

Question 5

Which of the following is NOT a mechanism for allocating housing in rent-controlled areas?

Accepted Answer

A)   ethnicity
B)   waiting lists
C)   price
D)   bribes/kickbacks
E)   political favors

Question 6

Use the following table to answer the following questions.
 
-If a minimum wage is set at $5.50,what is the amount of disequilibrium in the labor market?

Accepted Answer

A)   There would be a labor shortage of 25,515,000.
B)   There would be a labor surplus of 25,515,000.
C)   There would be neither a shortage nor a surplus.
D)   A labor surplus of 25,515,000 would be eliminated because individuals would decide to work in the illegal black market.
E)   A labor surplus of 25,515,000 would increase as individuals find work in the illegal black market.

Question 7

Discuss why any society would want a binding price floor law on a commodity such as corn.Who would benefit? Who would suffer? If it is the case that more suffering is caused by the presence of a price floor law,why does it remain in effect?

Accepted Answer

A society might interpret a binding pric...

Question 8

Refer to the accompanying figure,which shows both short-run and long-run demand and supply curves.If there is a $4 binding price ceiling imposed on a pharmaceutical drug,what will be the amount of the disequilibrium in the short run?

Accepted Answer

A)   There will be a shortage of 1,500,000 units.
B)   There will be a shortage of 800,000 units.
C)   There will not be a shortage; there will be a surplus.
D)   There will be a shortage of 2,000,000 units.
E)   There will be a shortage of 500,000 units.

Question 9

As a voter,why would or wouldn't someone vote for a referendum calling for an increase in the minimum wage? What consequences would result from raising the minimum wage?

Accepted Answer

Students' answers will vary.If the stude...

Question 10

Use the following table to answer the following questions.
Market for Corn
 
-What will be the amount of government expenditure required if a price floor for corn is set at $4.50 and the government agrees to purchase the amount of disequilibrium?

Accepted Answer

A)   $202,500
B)   $45,000
C)   no government payment required
D)   $10,000
E)   $900,000

Question 11

Refer to the accompanying figure.At what price would there be the LEAST pressure to form a black market?

Accepted Answer

A)   $5
B)   $8
C)   $13
D)   $15
E)   $20

Question 12

If a price floor is imposed at $15 per unit when the equilibrium market price is $12,there will be

Accepted Answer

A)   no surplus or shortage.
B)   a surplus.
C)   a shortage.
D)   a downward pressure on prices.
E)   an upward pressure on prices.

Question 13

Which of the following is an accurate statement about the consequence of a binding price ceiling?

Accepted Answer

A)   Binding price ceilings do not allow consumers to pay a lower price for the product in the legal market.
B)   Binding price ceilings encourage the formation of a black market.
C)   Binding price ceilings discourage the formation of a black market.
D)   Binding price ceilings create a surplus of the product.
E)   Binding price ceilings cause consumers to purchase more of the product in the legal market.

Question 14

Setting a price ceiling below the equilibrium price can result in

Accepted Answer

A)   a surplus,where the quantity demanded exceeds the quantity supplied.
B)   a shortage,where the quantity demanded exceeds the quantity supplied.
C)   a surplus,where the quantity supplied exceeds the quantity demanded.
D)   a shortage,where the quantity supplied exceeds the quantity demanded.
E)   no impact on the quantity demanded or on the quantity supplied.

Question 15

If a store sells a good at the market price,even though the government authorities have set the maximum price that can be charged for it,the store is selling the good in a(n)

Accepted Answer

A)   black market for a market price that is higher.
B)   black market for a market price that is lower.
C)   effort to eliminate a surplus of the good.
D)   legal market for a market price that is higher.
E)   legal market for a market price that is lower.

Question 16

Use the following information to answer the following questions.
Market for used cars:
Demand: Qd = 154,000 - 86P
Supply: Qs = -100 + 14P
-What would be the equilibrium price for used cars?

Accepted Answer

A)   $100
B)   $154,100
C)   $21,474
D)   $1,541
E)   $72

Question 17

If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season,what will be the consequence?

Accepted Answer

A)   Gas stations will be unable to sell all the gas they want at the temporary price ceiling price.
B)   Consumers will be unable to buy all the gas they want at the temporary price ceiling price.
C)   The supply curve for gas will increase and shift to the right.
D)   The demand curve for gas will increase and shift to the right.
E)   Equilibrium in the gas market will be achieved.

Question 18

Why would a politician find it difficult to remove a binding price ceiling?

Accepted Answer

A)   because it greatly benefits firms,and they would spend a lot of money to lobby against the law's repeal
B)   because it greatly benefits government,which receives additional tax revenue as a result
C)   because it greatly benefits all consumers,and they are also voters
D)   because it greatly benefits some consumers who are also voters
E)   because it greatly benefits society as a whole,with all consumers able to buy as much as firms produce

Question 19

Katherine is the president of the United States.In an attempt to make gasoline prices cheaper,she has imposed a binding price ceiling on gas.What would she expect her critics to say?

Accepted Answer

A)   The binding price ceiling will encourage oil companies to deplete the resource too quickly.
B)   The binding price ceiling will discourage individuals from using their personal automobiles to commute to work or school.
C)   The binding price ceiling will cause firms to minimize their spending on the research and development of alternatives to gasoline.
D)   The binding price ceiling will increase the likelihood that customers obtain needed gasoline on the black market.
E)   The binding price ceiling will cause firms to produce only gasoline of the highest quality.

Question 20

Use the following table to answer the following questions.
Market for Corn
 
-If the price ceiling for corn is $2.50,what amount and type of disequilibrium would be present in the market for corn?

Accepted Answer

A)   There would be neither a shortage nor a surplus.
B)   There would be a surplus of 61,000.
C)   There would be a shortage of 61,000.
D)   There would be a shortage of 186,000.
E)   There would be a shortage of 125,000.

Exam 6: Price Controls

Use the following table to answer the following questions. -What is the surplus when the price floor is $0.75 in the market for public transportation?

Correct AnswerverifiedShow Answer

Which of the following is an accurate statement about the consequence of a binding price ceiling?

Correct AnswerverifiedShow Answer

Which of the following is NOT a mechanism for allocating housing in rent-controlled areas?

Correct AnswerverifiedShow Answer

If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season,what will be the consequence?

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

Use the following information to answer the following questions. Market for used cars: Demand: Qd = 154,000 - 86P Supply: Qs = -100 + 14P -What would be the equilibrium price for used cars?

Correct AnswerverifiedShow Answer

The town of Fairness has a law stating that wages should be high enough to ensure that all people can afford to buy enough food for their families.The law that sets wages would be an example of a

Correct AnswerverifiedShow Answer

Discuss why any society would want a binding price floor law on a commodity such as corn.Who would benefit? Who would suffer? If it is the case that more suffering is caused by the presence of a price floor law,why does it remain in effect?

Correct AnswerverifiedA society might interpret a binding pric...View AnswerShow Answer

Setting a price ceiling below the equilibrium price can result in

Correct AnswerverifiedShow Answer

If a price floor is imposed at $15 per unit when the equilibrium market price is $12,there will be

Correct AnswerverifiedShow Answer

Katherine is the president of the United States.In an attempt to make gasoline prices cheaper,she has imposed a binding price ceiling on gas.What would she expect her critics to say?

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Market for Corn -If the price ceiling for corn is $2.50,what amount and type of disequilibrium would be present in the market for corn?

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Market for Corn -What will be the amount of government expenditure required if a price floor for corn is set at $4.50 and the government agrees to purchase the amount of disequilibrium?

Correct AnswerverifiedShow Answer

As a voter,why would or wouldn't someone vote for a referendum calling for an increase in the minimum wage? What consequences would result from raising the minimum wage?

Correct AnswerverifiedStudents' answers will vary.If the stude...View AnswerShow Answer

An example of a binding price ceiling is ________ the equilibrium price.

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. -If a minimum wage is set at $5.50,what is the amount of disequilibrium in the labor market?

Correct AnswerverifiedShow Answer

Refer to the accompanying figure,which shows both short-run and long-run demand and supply curves.If there is a $4 binding price ceiling imposed on a pharmaceutical drug,what will be the amount of the disequilibrium in the short run?

Correct AnswerverifiedShow Answer

Refer to the accompanying figure.At what price would there be the LEAST pressure to form a black market?

Correct AnswerverifiedShow Answer

Why would a politician find it difficult to remove a binding price ceiling?

Correct AnswerverifiedShow Answer

If a store sells a good at the market price,even though the government authorities have set the maximum price that can be charged for it,the store is selling the good in a(n)

Correct AnswerverifiedShow Answer

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Use the following information to answer the following questions. Market for used cars: Demand: Q_d = 154,000 - 86P Supply: Q_s = -100 + 14P -What would be the equilibrium price for used cars?

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A society might interpret a binding pric...
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Students' answers will vary.If the stude...
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