Question 1

What will happen in a market where a nonbinding price floor is removed?

Accepted Answer

A)   The products sold will become more plentiful.
B)   The price or quantity of the product sold on the legal market will not change.
C)   There will be upward pressure on the prices.
D)   There will be downward pressure on the prices.
E)   There will be increased pressure to buy and sell the good on the black market.F) B) and D)
G) A) and C)

Question 2

Use the following table to answer the following questions.
 
-At what price level does the labor market reach equilibrium?

Accepted Answer

A)   $5.00
B)   $5.50
C)   $6.00
D)   $6.50
E)   $7.00F) A) and B)
G) A) and C)

Question 3

The minimum wage law is an example of a

Accepted Answer

A)   price floor.
B)   price ceiling.
C)   law that requires quantity demanded to equal quantity supplied.
D)   law that allows individual employers and employees to make free decisions.
E)   law that sets the minimum number of hours that an employee must work for wages during the week.F) A) and B)
G) B) and E)

Question 4

A consequence of either a price ceiling or a price floor is

Accepted Answer

A)   a nonbinding price control.
B)   a market surplus.
C)   a market shortage.
D)   waiting lines.
E)   Price floors and price ceilings cannot have an identical outcome.F) C) and E)
G) A) and E)

Question 5

Use the following table to answer the following questions.
 
-What is the quantity demanded 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) F) A) and D)
G) B) and C)

Question 6

If a store sells a good at the market price,even though the government authorities have set the minimum price that can be charged,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.F) A) and B)
G) A) and C)

Question 7

Use the following table to answer the following questions.
Market for Corn
 
-What would be the equilibrium quantity in the market for corn?

Accepted Answer

A)   223,000
B)   3.5
C)   103,000
D)   200,000
E)   169,000F) A) and B)
G) B) and D)

Question 8

How would a free market be characterized?

Accepted Answer

The most important characteris...

Question 9

An election is coming up.The government has decided to curry votes from the cotton-growing states,so it has determined that the price of cotton is too low.
a.Suppose the government imposes a binding price floor on the cotton market.Draw a market model,showing the surplus of the market.
b.If the demand for cotton is elastic,why has the revenue in the market for cotton decreased?
c.Suppose the government (via the taxpayers)agrees to buy all the surplus at the price floor.For each market participant,consumers,producers,taxpayers,and government,explain who gains and loses,and why.

Accepted Answer

a.Draw a supply-demand diagram,showing a...

Question 10

What would you expect the consequences of size and quality to be for a product sold under a binding price ceiling?

Accepted Answer

A)   Both the quality and the size of the product will decrease.
B)   The quality of the product will increase but the size of the product will decrease.
C)   Both the quality and the size of the product will increase.
D)   The quality of the product will decrease but the size of the product will increase.
E)   Neither the quality nor the size of the product will be affected.F) B) and C)
G) B) and E)

Question 11

What will an individual do differently as a seller in the black market in the long run?

Accepted Answer

A)   He or she will substitute away from producing the product.
B)   He or she will substitute toward producing the product.
C)   When there exists a binding price floor,he or she will be able to sell the good at a higher price.
D)   When there exists a binding price ceiling,he or she will be able to sell the good at a lower price.
E)   What he or she does as a seller in the long run will be no different from what he or she does in the short run.F) C) and E)
G) A) and E)

Question 12

Refer to the accompanying table to answer the following questions. 
-At what price level does the apartment market experience its largest surplus?

Accepted Answer

A)   $1,500
B)   $1,550
C)   $1,700
D)   $1,750
E)   $1,800F) C) and D)
G) B) and C)

Question 13

Refer to the accompanying figure for the following questions. 1,predict the resulting surplus or shortage. A)  There would be a shortage of 75,000 units. B)  There would be a surplus of 75,000 units. C)  There would be neither a shortage nor a surplus. D)  There would be a shortage of 150,000 units. E)  There would be a surplus of 150,000 units." class="answers-bank-image d-inline" rel="preload" >
-The accompanying figure describes the market for gasoline in a local community.If the government were to place a price floor at P1,predict the resulting surplus or shortage.

Accepted Answer

A)   There would be a shortage of 75,000 units.
B)   There would be a surplus of 75,000 units.
C)   There would be neither a shortage nor a surplus.
D)   There would be a shortage of 150,000 units.
E)   There would be a surplus of 150,000 units.F) C) and D)
G) All of the above

Question 14

Suppose Lewis lives in a community with no price controls.What would he expect will happen if his town borders a community where there is a binding price floor on most products?

Accepted Answer

A)   Prices in the legal market in the community with a binding price floor will rise.
B)   Prices in the legal market in the community with a binding price floor will fall.
C)   There will be surpluses in the community with a binding price floor.
D)   More consumers will purchase the product in the community with the price floor.
E)   The black market in his community will be larger than the black market in the community with the binding price floor.F) B) and E)
G) A) and C)

Question 15

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.F) D) and E)
G) A) and C)

Question 16

Refer to the accompanying figure to answer the following questions. 1 is imposed,by how much would the quantity demanded change? A)  It would increase by 12,000 units. B)  It would decrease by 30,500 units. C)  It would decrease by 12,000 units. D)  It would increase by 30,500 units. E)  It would increase by 30,000 units." class="answers-bank-image d-inline" rel="preload" >
-The market is currently at market equilibrium.If a binding price ceiling of P1 is imposed,by how much would the quantity demanded change?

Accepted Answer

A)   It would increase by 12,000 units.
B)   It would decrease by 30,500 units.
C)   It would decrease by 12,000 units.
D)   It would increase by 30,500 units.
E)   It would increase by 30,000 units.F) A) and B)
G) C) and D)

Question 17

Use the following table to answer the following questions.
 
-What is the equilibrium price in the market for public transportation?

Accepted Answer

A)   $0.75
B)   $1.00
C)   $1.25
D)   $1.50
E)   $1.75F) B) and D)
G) A) and D)

Question 18

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 19

Why does a surplus exist under a binding price floor?

Accepted Answer

A)   It encourages sellers to produce less of the product.
B)   It encourages buyers to purchase more of the product.
C)   It makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market.
D)   It makes the price so low that the quantity demanded exceeds the quantity supplied on the legal market.
E)   It discourages sellers from increasing the quality of the products they sell,which in turn increases the quantity demanded.F) A) and C)
G) A) and E)

Question 20

One would expect there to be many customers for a black market good when the opportunity cost of finding the good under a

Accepted Answer

A)   binding price floor is high.
B)   binding price floor is low.
C)   nonbinding price ceiling is high.
D)   binding price ceiling is low.
E)   binding price ceiling is high.F) A) and E)
G) C) and D)

Exam 6: Price Controls

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 Answer
verified
Students' answers will vary.If the stude...
View Answer

Use the following table to answer the following questions. Market for Corn -What would be the equilibrium quantity in the market for corn?

Correct Answer
verified

Use the following table to answer the following questions. -What is the equilibrium price in the market for public transportation?

Correct Answer
verified

What will an individual do differently as a seller in the black market in the long run?

Correct Answer
verified

How would a free market be characterized?

Correct Answer
verified
The most important characteris...
View Answer

What would you expect the consequences of size and quality to be for a product sold under a binding price ceiling?

Correct Answer
verified

Refer to the accompanying figure for the following questions. -The accompanying figure describes the market for gasoline in a local community.If the government were to place a price floor at P₁,predict the resulting surplus or shortage.

Correct Answer
verified

Why does a surplus exist under a binding price floor?

Correct Answer
verified

A consequence of either a price ceiling or a price floor is

Correct Answer
verified

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

Correct Answer
verified

Use the following table to answer the following questions. -At what price level does the labor market reach equilibrium?

Correct Answer
verified

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

Correct Answer
verified

The minimum wage law is an example of a

Correct Answer
verified

What will happen in a market where a nonbinding price floor is removed?

Correct Answer
verified

One would expect there to be many customers for a black market good when the opportunity cost of finding the good under a

Correct Answer
verified

Suppose Lewis lives in a community with no price controls.What would he expect will happen if his town borders a community where there is a binding price floor on most products?

Correct Answer
verified

Correct Answer
verified
a.Draw a supply-demand diagram,showing a...
View Answer

Refer to the accompanying figure to answer the following questions. -The market is currently at market equilibrium.If a binding price ceiling of P₁ is imposed,by how much would the quantity demanded change?

Correct Answer
verified

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

Correct Answer
verified

Refer to the accompanying table to answer the following questions. -At what price level does the apartment market experience its largest surplus?

Correct Answer
verified

Exam 6: Price Controls

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

Use the following table to answer the following questions. Market for Corn -What would be the equilibrium quantity in the market for corn?

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. -What is the equilibrium price in the market for public transportation?

Correct AnswerverifiedShow Answer

What will an individual do differently as a seller in the black market in the long run?

Correct AnswerverifiedShow Answer

How would a free market be characterized?

Correct AnswerverifiedThe most important characteris...View AnswerShow Answer

What would you expect the consequences of size and quality to be for a product sold under a binding price ceiling?

Correct AnswerverifiedShow Answer

Refer to the accompanying figure for the following questions. -The accompanying figure describes the market for gasoline in a local community.If the government were to place a price floor at P1,predict the resulting surplus or shortage.

Correct AnswerverifiedShow Answer

Why does a surplus exist under a binding price floor?

Correct AnswerverifiedShow Answer

A consequence of either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. -At what price level does the labor market reach equilibrium?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The minimum wage law is an example of a

Correct AnswerverifiedShow Answer

What will happen in a market where a nonbinding price floor is removed?

Correct AnswerverifiedShow Answer

One would expect there to be many customers for a black market good when the opportunity cost of finding the good under a

Correct AnswerverifiedShow Answer

Suppose Lewis lives in a community with no price controls.What would he expect will happen if his town borders a community where there is a binding price floor on most products?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Draw a supply-demand diagram,showing a...View AnswerShow Answer

Refer to the accompanying figure to answer the following questions. -The market is currently at market equilibrium.If a binding price ceiling of P1 is imposed,by how much would the quantity demanded change?

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

Refer to the accompanying table to answer the following questions. -At what price level does the apartment market experience its largest surplus?

Correct AnswerverifiedShow Answer

Correct Answer
verified
Students' answers will vary.If the stude...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The most important characteris...
View Answer

Correct Answer
verified

Refer to the accompanying figure for the following questions. -The accompanying figure describes the market for gasoline in a local community.If the government were to place a price floor at P₁,predict the resulting surplus or shortage.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.Draw a supply-demand diagram,showing a...
View Answer

Refer to the accompanying figure to answer the following questions. -The market is currently at market equilibrium.If a binding price ceiling of P₁ is imposed,by how much would the quantity demanded change?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified