Question 1

Currently, the federal minimum wage is set at $7.25 per hour. A survey conducted by Newsweek magazine (June 27, 2011) indicated that many Americans would be willing to work for far less than the minimum wage-some as low as 25¢ per hour! What would happen if the U.S. government eliminated the minimum wage, and instead let wages be set by the marketplace?

Accepted Answer

Most likely the wage for low-skilled job...

Question 2

Use the following to answer questions:
Figure: Price Ceilings and Consumer Valuation 
-Figure: Price Ceilings and Lost Consumer Surplus  Refer to the figure. The figure measures the consumer surplus associated with a price ceiling, assuming:

Accepted Answer

A)   the worst-case scenario.
B)   the best-case scenario.
C)   random allocation of the product between highest-valued and lowest-valued users.
D)   total consumer surplus is maximized in the market.

Question 3

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 4

Airlines in the United States were subject to ______ regulation from 1938 to 1978.

Accepted Answer

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

Question 5

Use the following to answer questions:
Figure: Supply and Demand 2 
-(Figure: Supply and Demand 2)  If the government sets the price at $8 in this figure, demanders are willing to pay ______ per unit for ______ units.

Accepted Answer

A)   $8; 12
B)   $8; 6
C)   $14; 12
D)   $14; 6

Question 6

Use the following to answer questions:
Figure: Price Ceilings and Consumer Valuation 
-(Figure: Price Ceilings and Consumer Valuation)  Refer to the figure. Suppose a price ceiling of $3 goes into effect. If the goods sold are allocated only to the highest-value users, the total consumer surplus in the market would be:

Accepted Answer

A)   $180.
B)   $30.
C)   $120.
D)   $150.

Question 7

Ultimately, repealing the price controls on gasoline and oil:

Accepted Answer

A)   led to permanently higher gasoline prices.
B)   led to a higher supply of gasoline and lower prices.
C)   was disastrous since the market collapsed due to a lack of government regulation.
D)   was not able to eliminate the shortages of gasoline in the United States.

Question 8

The minimum wage is an example of a(n) :

Accepted Answer

A)   price ceiling.
B)   price floor.
C)   wage subsidy.
D)   efficient policy.

Question 9

A binding price ceiling leads to a(n) :

Accepted Answer

A)   shortage.
B)   surplus.
C)   equilibrium quantity.
D)   quantity of zero units.

Question 10

When the maximum price that can be legally charged is above the market price we say that there is a price floor.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

When a price ceiling is in effect, quantity ______ will be greater than quantity ______, creating a ______.

Accepted Answer

A)   supplied; demanded; surplus
B)   demanded; supplied; shortage
C)   supplied; demanded; shortage
D)   demanded; supplied; surplus

Question 13

In situations of excess demand, sellers might decrease service levels when they are unable to raise prices because they wish to:

Accepted Answer

A)   reduce excess demand.
B)   decrease surpluses.
C)   raise their profit levels.
D)   raise their sales.

Question 14

Use the following to answer questions:
Figure: Price Ceiling of Ps 
-(Figure: Price Ceiling of Ps)  Refer to the figure. Suppose a price ceiling of Ps is imposed. The shaded area may likely represent all of the following EXCEPT:

Accepted Answer

A)   value of wasted time.
B)   the amount that buyers bribe sellers.
C)   the amount of corruption.
D)   consumer surplus.

Question 15

In your city, it is illegal to charge more than a certain amount of money for an apartment. People have been signing leases for the highest legal amount, but also agreeing to pay a monthly bribe "on the side" to their landlord in order to get the apartment in the first place and to get timely maintenance. What is the effect of the bribes?

Accepted Answer

A)   The bribes make it harder to find an apartment.
B)   The bribes cause there to be unexploited gains from trade.
C)   The bribes cause apartments to be allocated to renters who do not have the highest-valued use of the apartments.
D)   The bribes minimize the damage from the rent control.

Question 16

Effective price ceilings cause misallocation of resources because scarce resources are usually not allocated to their highest-value uses.

Accepted Answer

A) True 
 B)False

Question 17

After President Reagan repealed the price controls on gasoline:

Accepted Answer

A)   the supply of gasoline fell dramatically.
B)   the market experienced a period of vast surpluses as a result of the lack of regulation.
C)   prices rose a little at first, but supply quickly began to increase and prices fell.
D)   prices rose dramatically as a result of the repealed legislation.

Question 18

One of the virtues of the market process is that it is open to new ideas, innovations, and:

Accepted Answer

A)   reallocation of property.
B)   central planning by government.
C)   profits.
D)   experiments.

Question 19

Once one accounts for time costs and bribes, it may be more expensive to make purchases at the government-controlled price than at the free-market price.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following events occurred during the 1973-1974 oil crisis in the United States?

Accepted Answer

A)   Gas stations were ordered to be closed between 9 PM on Saturday and 12:01 AM on Monday.
B)   Daylight savings time was implemented.
C)   There were shortages of steel drilling equipment.
D)   All of the answers are correct.

Exam 8: Price Ceilings and Floors

Correct Answer
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Correct Answer
verified

One of the virtues of the market process is that it is open to new ideas, innovations, and:

Correct Answer
verified

In situations of excess demand, sellers might decrease service levels when they are unable to raise prices because they wish to:

Correct Answer
verified

Once one accounts for time costs and bribes, it may be more expensive to make purchases at the government-controlled price than at the free-market price.

Correct Answer
verified

Deregulation improves the allocation of resources by:

Correct Answer
verified

Use the following to answer questions: Figure: Supply and Demand 2 -(Figure: Supply and Demand 2) If the government sets the price at $8 in this figure, demanders are willing to pay per unit for units.

Correct Answer
verified

After President Reagan repealed the price controls on gasoline:

Correct Answer
verified

Correct Answer
verified
Most likely the wage for low-skilled job...
View Answer

A binding price ceiling leads to a(n) :

Correct Answer
verified

When a price ceiling is in effect, quantity will be greater than quantity , creating a __.

Correct Answer
verified

Use the following to answer questions: Figure: Price Ceiling of Ps -(Figure: Price Ceiling of Ps) Refer to the figure. Suppose a price ceiling of Ps is imposed. The shaded area may likely represent all of the following EXCEPT:

Correct Answer
verified

Ultimately, repealing the price controls on gasoline and oil:

Correct Answer
verified

Which of the following events occurred during the 1973-1974 oil crisis in the United States?

Correct Answer
verified

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

Correct Answer
verified

The minimum wage is an example of a(n) :

Correct Answer
verified

Use the following to answer questions: Figure: Price Ceilings and Consumer Valuation -Figure: Price Ceilings and Lost Consumer Surplus Refer to the figure. The figure measures the consumer surplus associated with a price ceiling, assuming:

Correct Answer
verified

Effective price ceilings cause misallocation of resources because scarce resources are usually not allocated to their highest-value uses.

Correct Answer
verified

When the maximum price that can be legally charged is above the market price we say that there is a price floor.

Correct Answer
verified

Airlines in the United States were subject to ______ regulation from 1938 to 1978.

Correct Answer
verified

Exam 8: Price Ceilings and Floors

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the virtues of the market process is that it is open to new ideas, innovations, and:

Correct AnswerverifiedShow Answer

In situations of excess demand, sellers might decrease service levels when they are unable to raise prices because they wish to:

Correct AnswerverifiedShow Answer

Once one accounts for time costs and bribes, it may be more expensive to make purchases at the government-controlled price than at the free-market price.

Correct AnswerverifiedShow Answer

Deregulation improves the allocation of resources by:

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Supply and Demand 2 -(Figure: Supply and Demand 2) If the government sets the price at $8 in this figure, demanders are willing to pay ______ per unit for ______ units.

Correct AnswerverifiedShow Answer

After President Reagan repealed the price controls on gasoline:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedMost likely the wage for low-skilled job...View AnswerShow Answer

A binding price ceiling leads to a(n) :

Correct AnswerverifiedShow Answer

When a price ceiling is in effect, quantity ______ will be greater than quantity ______, creating a ______.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Price Ceiling of Ps -(Figure: Price Ceiling of Ps) Refer to the figure. Suppose a price ceiling of Ps is imposed. The shaded area may likely represent all of the following EXCEPT:

Correct AnswerverifiedShow Answer

Ultimately, repealing the price controls on gasoline and oil:

Correct AnswerverifiedShow Answer

Which of the following events occurred during the 1973-1974 oil crisis in the United States?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The minimum wage is an example of a(n) :

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Price Ceilings and Consumer Valuation -Figure: Price Ceilings and Lost Consumer Surplus Refer to the figure. The figure measures the consumer surplus associated with a price ceiling, assuming:

Correct AnswerverifiedShow Answer

Effective price ceilings cause misallocation of resources because scarce resources are usually not allocated to their highest-value uses.

Correct AnswerverifiedShow Answer

When the maximum price that can be legally charged is above the market price we say that there is a price floor.

Correct AnswerverifiedShow Answer

Airlines in the United States were subject to ______ regulation from 1938 to 1978.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Use the following to answer questions: Figure: Supply and Demand 2 -(Figure: Supply and Demand 2) If the government sets the price at $8 in this figure, demanders are willing to pay per unit for units.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Most likely the wage for low-skilled job...
View Answer

Correct Answer
verified

When a price ceiling is in effect, quantity will be greater than quantity , creating a __.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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