Question 1

The effect of legislation establishing a minimum wage above the market clearing wage is

Accepted Answer

A)  unemployment.
B)  a shortage of labor.
C)  higher wages for all workers.
D)  a shift of the demand for labor curve.

Question 2

Which one of the following could account for an increase in the market clearing price of iPads?

Accepted Answer

A)  a decrease in demand for iPads
B)  an increase in supply of iPads
C)  an increase in supply along with a decrease in demand
D)  an increase in demand along with a decrease in supply

Question 3

If both the demand curve and the supply curve shift to the right,we can unambiguously conclude that the

Accepted Answer

A)  market clearing price will increase.
B)  market clearing price will decrease.
C)  equilibrium quantity will increase.
D)  equilibrium quantity will decrease.

Question 4

An example of a black market is

Accepted Answer

A)  the market for high fashions.
B)  the hiring of undocumented workers.
C)  a farmer's market.
D)  a discount market.

Question 5

Hospitals announce that there are not enough nurses available to keep them fully staffed.Economically speaking,what does this announcement mean?

Accepted Answer

A)  The market wage for trained nurses is currently above the equilibrium wage.
B)  There is currently a surplus of nurses in this market.
C)  The market wage for nurses will eventually rise to the market clearing wage.
D)  The market will adjust very rapidly to correct this imbalance because anyone can be a nurse without any training.

Question 6

If a price ceiling were established above the equilibrium price,

Accepted Answer

A)  it would have no effect on the quantity demanded.
B)  it would create a shortage.
C)  it would create a surplus.
D)  none of the above.

Question 7

When import quotas are imposed by a government,

Accepted Answer

A)  the domestic producers always lower the prices of their products to ensure that their products are sold.
B)  the government is trying to discourage consumers from buying foreign-made goods.
C)  the supply of the product on the domestic market increases.
D)  the price ceiling for the product has to be lowered.

Question 8

The economy is undergoing a recession that has reduced consumers' incomes.In the computer chip market,this will lead to

Accepted Answer

A)  an increase in price and a decrease in quantity.
B)  an increase in price and an increase in quantity.
C)  a decrease in price and a decrease in quantity.
D)  a decrease in price and an increase in quantity.

Question 9

When the government sets a price floor which is below the equilibrium price

Accepted Answer

A)  a surplus will develop.
B)  a shortage will develop.
C)  the equilibrium price will be maintained.
D)  a price ceiling will follow.

Question 10

Price controls

Accepted Answer

A)  exist when firms decide that they want to charge a higher price for their product.
B)  exist when consumers boycott a product.
C)  are government-mandated minimum or maximum prices that may be charged for goods.
D)  are the benefit of discount stores like Sam's Club.

Question 11

An example of a black market is

Accepted Answer

A)  a retail market.
B)  a discount market.
C)  scalping.
D)  barter.

Question 12

A price ceiling is

Accepted Answer

A)  the lowest price a seller can charge for a good without losing all her customers.
B)  a legal minimum price that can be charged for a particular good or service.
C)  a legal maximum price that can be charged for a particular good or service.
D)  the lowest price a buyer can pay for a good without having to report the purchase to the government.

Question 13

After an increase in the demand for construction workers,the market will attain its new long-run equilibrium faster if

Accepted Answer

A)  wages are flexible.
B)  wages are inflexible,forcing new people to enter the market.
C)  unions restrict the number of new construction workers.
D)  people ignore the shortage in the short run.

Question 14

-Refer to the above figure.A price floor of $60 results in

Accepted Answer

A)  a shortage of 100 units.
B)  a shortage of 200 units.
C)  a surplus of 100 units.
D)  a surplus of 200 units.

Question 15

All other factors being constant,a reduction in price tends to cause which of the following?

Accepted Answer

A)  an increase in supply and an increase in demand.
B)  a reduction in supply and an increase in demand.
C)  an increase in quantity supplied and a reduction in quantity demanded.
D)  a reduction in quantity supplied and an increase in quantity demanded.

Question 16

Transaction costs are

Accepted Answer

A)  production costs.
B)  taxes on production.
C)  regulations on production.
D)  costs associated with exchange.

Question 17

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

Accepted Answer

A)  production excess.
B)  excess demand.
C)  market surplus.
D)  producer surplus.

Question 18

Other things being equal,a higher price induces

Accepted Answer

A)  buyers to reduce the amount they want to buy and sellers to increase the amount they are willing to sell.
B)  buyers to increase the amount they want to buy and sellers to reduce the amount they are willing to sell.
C)  buyers to reduce the amount they want to buy and sellers to reduce the amount they are willing to sell.
D)  buyers to increase the amount they want to buy and sellers to increase the amount they are willing to sell.

Question 19

-Refer to the above figure.Other things being equal,when the government imposes a price floor at P2,then we would expect

Accepted Answer

A)  the quantity demanded is Q2.
B)  a surplus will occur.
C)  price to decline until an equilibrium is achieved at P0.
D)  consumers to bid against each other for goods and force the price even higher.

Question 20

Suppose that consumer income decreases and that hamburger is an inferior good.Which of the following will occur in the market for hamburger?

Accepted Answer

A)  Market clearing price will rise,and equilibrium quantity will rise.
B)  Market clearing price will fall,and equilibrium quantity will fall.
C)  Market clearing price will rise,and equilibrium quantity will fall.
D)  Market clearing price will fall,and equilibrium quantity will rise.

Exam 4: Extensions of Demand and Supply Analysis

The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

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After an increase in the demand for construction workers,the market will attain its new long-run equilibrium faster if

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The effect of legislation establishing a minimum wage above the market clearing wage is

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An example of a black market is

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If a price ceiling were established above the equilibrium price,

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When the government sets a price floor which is below the equilibrium price

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-Refer to the above figure.Other things being equal,when the government imposes a price floor at P2,then we would expect

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Transaction costs are

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All other factors being constant,a reduction in price tends to cause which of the following?

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The economy is undergoing a recession that has reduced consumers' incomes.In the computer chip market,this will lead to

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If both the demand curve and the supply curve shift to the right,we can unambiguously conclude that the

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Other things being equal,a higher price induces

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Suppose that consumer income decreases and that hamburger is an inferior good.Which of the following will occur in the market for hamburger?

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Which one of the following could account for an increase in the market clearing price of iPads?

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A price ceiling is

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-Refer to the above figure.A price floor of $60 results in

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When import quotas are imposed by a government,

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Hospitals announce that there are not enough nurses available to keep them fully staffed.Economically speaking,what does this announcement mean?

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An example of a black market is

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Price controls

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