Question 1

In the market for a given product,when a price floor is set above the equilibrium price the result will be

Accepted Answer

A)   more exchanges made in the market.
B)   an increase in the supply of the product.
C)   a decrease in the demand for the product.
D)   a deadweight loss.E) All of the above
F) C) and D)

Question 2

A minimum wage law (that sets the minimum wage above the equilibrium wage) can be expected to

Accepted Answer

A)   clear the market for unskilled workers.
B)   increase employment for unskilled workers.
C)   increase the number of firms in those industries where the law is effective.
D)   reduce the hours worked for some unskilled workers.
E)   all of the aboveF) All of the above
G) C) and D)

Question 3

A price floor (set above the equilibrium price) on rice will

Accepted Answer

A)   force otherwise profitable farmers out of business.
B)   result in a shortage of rice.
C)   result in a surplus of rice.
D)   clear the market for rice.
E)   both a and bF) A) and E)
G) A) and D)

Question 4

In 1973 and 1979,the U.S.federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Accepted Answer

A) True 
 B)False

Question 5

Price ceilings and price floors

Accepted Answer

A)   shift demand and supply curves and therefore have no effect upon the rationing function of prices.
B)   interfere with the rationing function of prices.
C)   make the rationing function of free markets more efficient.
D)   cause surpluses and shortages, respectively.E) B) and D)
F) B) and C)

Question 6

The absolute price of a good is the price of that good in terms of another good.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 4-3
 1 is set as a price ceiling it will have an effect on the market for good X. B)  If price P1 is set as a price floor it will have an effect on the market for good X. C)  Price P1 is the equilibrium price for good X. D)  If price P1 is set as a price floor, then it is the highest price that can legally be charged in the market for good X." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-3.Which of the following is true?

Accepted Answer

A)   If price P1 is set as a price ceiling it will have an effect on the market for good X.
B)   If price P1 is set as a price floor it will have an effect on the market for good X.
C)   Price P1 is the equilibrium price for good X.
D)   If price P1 is set as a price floor, then it is the highest price that can legally be charged in the market for good X.E) B) and D)
F) A) and C) A

Question 8

Exhibit 4-8
 F. What is the quantity of wheat purchased at PF? A)  Q1 B)  Q2 C)  Q3 D)  Q2 - Q1" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the quantity of wheat purchased at PF?

Accepted Answer

A)   Q1
B)   Q2
C)   Q3
D)   Q2 - Q1E) B) and C)
F) All of the above

Question 9

Exhibit 4-2
 
-Exhibit 4-2 represents the orange juice market.The horizontal line at $2 shows a price ceiling imposed by the government.Which of the following statements is true at this price?

Accepted Answer

A)   At the price ceiling the surplus equals 400 units.
B)   At the price ceiling the shortage equals 400 units.
C)   At the price ceiling the surplus equals 300 units.
D)   At the price ceiling the shortage equals 200 units.
E)   none of the aboveF) A) and B)
G) B) and D)

Question 10

Which of the following statement is false?

Accepted Answer

A)   There is evidence of a shortage in the market for kidneys (for transplants) .
B)   The waiting list for transplanted kidneys is used as a non-price rationing device.
C)   Kidneys are currently being illegally bought and sold.
D)   In the market for kidneys (for transplants)  the legal price is the equilibrium price.E) B) and D)
F) All of the above

Question 11

If the relative price of one unit of good X is 5 units of good Y,then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________.

Accepted Answer

A)   $20,000; $10,000
B)   $40,000; $8,000
C)   $30,000; $5,0000
D)   $5,000; $40,000
E)   a and cF) D) and E)
G) None of the above B

Question 12

Exhibit 4-4
 3. B)  Graph (2) : As supply increases, equilibrium quantity remains constant. C)  Graph (3) : As demand increases, equilibrium price remains constant. D)  Graph (4) : As supply changes, equilibrium price stays the same." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-4.Which of the following is false?

Accepted Answer

A)   Graph (1) : There is a shortage when price is P3.
B)   Graph (2) : As supply increases, equilibrium quantity remains constant.
C)   Graph (3) : As demand increases, equilibrium price remains constant.
D)   Graph (4) : As supply changes, equilibrium price stays the same.E) None of the above
F) B) and C)

Question 13

Exhibit 4-3
 3 is set as a price ceiling it will have an effect on the market for good X. B)  If price P3 is set as a price floor it will have an effect on the market for good X. C)  Price P3 is the equilibrium price for good X. D)  Price P3 is the highest price that can legally be charged in the market for good X." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-3.Which of the following is true?

Accepted Answer

A)   If price P3 is set as a price ceiling it will have an effect on the market for good X.
B)   If price P3 is set as a price floor it will have an effect on the market for good X.
C)   Price P3 is the equilibrium price for good X.
D)   Price P3 is the highest price that can legally be charged in the market for good X.E) A) and C)
F) C) and D)

Question 14

If the price of good X is $90 and the price of good Y is $30,it follows that the relative price of one unit of good Y is ___________ unit(s) of good X.

Accepted Answer

A)   0.33
B)   1.33
C)   3.00
D)   2.00
E)   There is not enough information to answer the question.F) C) and D)
G) None of the above

Question 15

If the absolute price of a computer is $1,500 and the relative price of a dining room table is 2 computers,it follows that the absolute price of a dining room table is

Accepted Answer

A)   $10,000.
B)   $750.
C)   $3,000.
D)   $30,000.
E)   none of the aboveF) A) and E)
G) None of the above

Question 16

Exhibit 4-8
 F. What is the size of the total surplus at PF? A)  area 1 + 2 + 3 B)  area 1 + 2 + 3 + 4 C)  area 1 + 2 + 3 + 4 + 5 D)  area 1 + 2 + 3 + 4 + 5 + 6" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the total surplus at PF?

Accepted Answer

A)   area 1 + 2 + 3
B)   area 1 + 2 + 3 + 4
C)   area 1 + 2 + 3 + 4 + 5
D)   area 1 + 2 + 3 + 4 + 5 + 6E) None of the above
F) B) and D)

Question 17

If the relative price of one unit of good Y is 0.25 units of good Z,then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

Accepted Answer

A)   $4,000; $2,000
B)   $1,000; $2,000
C)   $2,000; $1,000
D)   a and c
E)   none of the aboveF) D) and E)
G) A) and B) E

Question 18

Situation 4-1
 
-Refer to Situation 4-1.Because price controls were in effect at the time the embargo occurred,an economist would predict that

Accepted Answer

A)   the number of dollars one would need to pay at the pump for a full tank of gasoline would increase sharply.
B)   the number of dollars one would need to pay at the pump for a full tank of gasoline would decline sharply.
C)   long waiting lines and black markets would appear.
D)   a surplus of gasoline would result.E) A) and B)
F) None of the above

Question 19

Jake is an excellent barber.However,all customers who come to him for a haircut must buy a bottle of shampoo.This type of arrangement is known as

Accepted Answer

A)   a tie-in sale.
B)   a sweetheart deal.
C)   an exclusive contract.
D)   a cross subsidy.E) C) and D)
F) B) and C)

Question 20

Exhibit 4-4
 2 would not have an impact on the market. B)  Graph (2) : As supply increases, equilibrium price remains constant. C)  Graph (3) : As demand increases, equilibrium quantity remains constant. D)  Graph (4) : As supply increases, equilibrium quantity increases." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-4.Which of the following is false?

Accepted Answer

A)   Graph (1) : A price ceiling set at P2 would not have an impact on the market.
B)   Graph (2) : As supply increases, equilibrium price remains constant.
C)   Graph (3) : As demand increases, equilibrium quantity remains constant.
D)   Graph (4) : As supply increases, equilibrium quantity increases.E) A) and B)
F) None of the above

Exam 4: Prices: Free, Controlled, and Relative

In the market for a given product,when a price floor is set above the equilibrium price the result will be

Correct AnswerverifiedShow Answer

A minimum wage law (that sets the minimum wage above the equilibrium wage) can be expected to

Correct AnswerverifiedShow Answer

A price floor (set above the equilibrium price) on rice will

Correct AnswerverifiedShow Answer

In 1973 and 1979,the U.S.federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Correct AnswerverifiedShow Answer

Price ceilings and price floors

Correct AnswerverifiedShow Answer

The absolute price of a good is the price of that good in terms of another good.

Correct AnswerverifiedShow Answer

Exhibit 4-3 -Refer to Exhibit 4-3.Which of the following is true?

Correct AnswerverifiedA

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the quantity of wheat purchased at PF?

Correct AnswerverifiedShow Answer

Exhibit 4-2 -Exhibit 4-2 represents the orange juice market.The horizontal line at $2 shows a price ceiling imposed by the government.Which of the following statements is true at this price?

Correct AnswerverifiedShow Answer

Which of the following statement is false?

Correct AnswerverifiedShow Answer

If the relative price of one unit of good X is 5 units of good Y,then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________.

Correct AnswerverifiedB

Exhibit 4-4 -Refer to Exhibit 4-4.Which of the following is false?

Correct AnswerverifiedShow Answer

Exhibit 4-3 -Refer to Exhibit 4-3.Which of the following is true?

Correct AnswerverifiedShow Answer

If the price of good X is $90 and the price of good Y is $30,it follows that the relative price of one unit of good Y is ___________ unit(s) of good X.

Correct AnswerverifiedShow Answer

If the absolute price of a computer is $1,500 and the relative price of a dining room table is 2 computers,it follows that the absolute price of a dining room table is

Correct AnswerverifiedShow Answer

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the total surplus at PF?

Correct AnswerverifiedShow Answer

If the relative price of one unit of good Y is 0.25 units of good Z,then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

Correct AnswerverifiedE

Situation 4-1 -Refer to Situation 4-1.Because price controls were in effect at the time the embargo occurred,an economist would predict that

Correct AnswerverifiedShow Answer

Jake is an excellent barber.However,all customers who come to him for a haircut must buy a bottle of shampoo.This type of arrangement is known as

Correct AnswerverifiedShow Answer

Exhibit 4-4 -Refer to Exhibit 4-4.Which of the following is false?

Correct AnswerverifiedShow Answer

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A

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What is the quantity of wheat purchased at P_F?

Correct Answer
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If the relative price of one unit of good X is 5 units of good Y,then it follows that the absolute price of good X can be and the absolute price of good Y can be .

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B

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Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What is the size of the total surplus at P_F?

Correct Answer
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If the relative price of one unit of good Y is 0.25 units of good Z,then it follows that the absolute price of good Z can be and the absolute price of good Y can be .

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E

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