Question 1

Do all buyers benefit from a binding price ceiling?

Accepted Answer

A)   Yes. A binding price ceiling benefits all buyers because it allows them to obtain the good in the legal market.
B)   No. A binding price ceiling benefits only some buyers because not all are able to obtain the good in the legal market.
C)   No. A binding price ceiling benefits no buyers because sellers are unwilling to sell any of their products.
D)   No. A binding price ceiling benefits only some buyers because, although the price is initially lower, it eventually increases to the equilibrium price.
E)   No. A binding price ceiling benefits no buyers because they are unwilling to buy any of the products at a price higher than the equilibrium.

Question 2

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 3

Why would most economists and all free-market economists) not favor price controls?

Accepted Answer

Most economists and all free-market econ...

Question 4

Use the following information to answer the next  questions. Market for flat-screen TVs:
Demand: Qd = 2,600 - 5P
Supply: Qs = -1,000 + 10P
-What would be the equilibrium quantity for flat-screen TVs?

Accepted Answer

A)   240
B)   140
C)   24
D)   1,400
E)   1,600

Question 5

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 6

A market where exchanges occur despite price regulations is called an)  _______market.

Accepted Answer

A)   hidden
B)   noncompetitive
C)   black
D)   prohibited
E)   outlaw

Question 7

Suppose Kate lives in a community with no price controls. What could she expect will happen if her town borders a community where there is a nonbinding price ceiling on most products?

Accepted Answer

A)   Legal market prices will rise in the community with a binding price ceiling.
B)   Legal market prices will fall in the community with a binding price ceiling.
C)   The price and the quantity sold in the community without a nonbinding price ceiling will be the same as the price and quantity in the community with a nonbinding price ceiling.
D)   There will be more shortages in the community with a binding price ceiling.
E)   The black market in the community with a binding price ceiling will not be strong because consumers will simply purchase the product in the community that has no price ceiling.

Question 8

If the price floor for corn is set at $5.00, what amount and type of disequilibrium will be present in the market for corn?

Accepted Answer

A)   There will be no shortage or surplus.
B)   There will be a shortage of 103,000.
C)   There will be a surplus of 103,000.
D)   There will be a surplus of 223,000.
E)   There will be a surplus of 120,000.

Question 9

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 10

What is the long-run consequence of a price ceiling law?

Accepted Answer

A)   A surplus will continue to exist and will grow larger over time.
B)   A surplus will continue to exist and will grow smaller over time.
C)   A shortage will continue to exist and will grow larger over time.
D)   A shortage will continue to exist and will grow smaller over time.
E)   The amount of the surplus will not change.

Question 11

Use the following table to answer the next questions.
   Market for Public Transportation  Price  Quantity Demanded  Quantity Supplied $0.75100,00065,000$1.0092,00080,000$1.2586,00086,000$1.5080,000100,000$1.7575,000115,000$2.0068,000116,000\begin{array}{l}	ext { Market for Public Transportation }\\begin{array} { l c c } \hline 	ext { Price } & 	ext { Quantity Demanded } & 	ext { Quantity Supplied } \\hline \$ 0.75 & 100,000 & 65,000 \\$ 1.00 & 92,000 & 80,000 \\$ 1.25 & 86,000 & 86,000 \\$ 1.50 & 80,000 & 100,000 \\$ 1.75 & 75,000 & 115,000 \\$ 2.00 & 68,000 & 116,000\end{array}\end{array} Market for Public Transportation  Price $0.75$1.00$1.25$1.50$1.75$2.00​ Quantity Demanded 100,00092,00086,00080,00075,00068,000​ Quantity Supplied 65,00080,00086,000100,000115,000116,000​​​ 
-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)   $1.75

Question 12

Refer to the accompanying figure for the next 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.

Question 13

Let's say that Esther is a politician who promises cheaper gasoline for everyone in the country if she is elected. Once she is elected, she makes gas cheaper by imposing a price ceiling that is one full dollar less than the market's equilibrium price. What would be the reaction of the sellers of gasoline and of the public to Esther's price ceiling law? Would she expect to be reelected in the long run?

Accepted Answer

The public would initially be quite happ...

Question 14

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 15

What is the incentive to create a black market when a binding price ceiling exists?

Accepted Answer

A)   A black market emerges because sellers have a surplus that they need to sell.
B)   A black market emerges because sellers want a market where they can sell lower-quality products.
C)   A black market emerges because sellers want a market where they can sell higher-quality products at higher prices.
D)   A black market does not emerge because sellers are content to sell at the lower price.
E)   A black market emerges because buyers who have a low opportunity cost are seeking out the product.

Question 16

Why are the long-run consequences of a price control different from the short-run consequences of a price control? Be specific, and consider both price floors and price ceilings in your answer.

Accepted Answer

The long-run consequence of a price floo...

Question 17

A binding minimum wage will increase the income of

Accepted Answer

A)   all workers.
B)   potential workers seeking employment.
C)   only those workers in jobs that would normally pay less than minimum wage.
D)   only those workers in jobs that would normally pay more than minimum wage.
E)   no workers.

Question 18

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

Accepted Answer

A)   Binding price floors do not allow sellers to receive a higher price if they sell the product in the legal market.
B)   Binding price floors encourage the formation of a black market.
C)   Binding price floors discourage the formation of a black market.
D)   Binding price floors create a shortage of the product.
E)   Binding price floors cause consumers to want to purchase more of the product in the legal market.

Question 19

Why does a surplus that occurs under a binding price floor increase over time?

Accepted Answer

A)   Demand becomes more elastic.
B)   Demand becomes more inelastic.
C)   Demand and supply both become more elastic.
D)   Demand and supply both become more inelastic.
E)   Demand becomes more elastic, but supply becomes more inelastic.

Question 20

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original, legal market price. What would be the positive and negative consequences to such a law?

Accepted Answer

The positive consequence would be for th...

Exam 5: Price Controls

Use the following information to answer the next questions. Market for flat-screen TVs: Demand: Q_d = 2,600 - 5P Supply: Q_s = -1,000 + 10P -What would be the equilibrium quantity for flat-screen TVs?

Correct Answer
verified

Why are the long-run consequences of a price control different from the short-run consequences of a price control? Be specific, and consider both price floors and price ceilings in your answer.

Correct Answer
verified
The long-run consequence of a price floo...
View 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 Answer
verified

Do all buyers benefit from a binding price ceiling?

Correct Answer
verified

What is the long-run consequence of a price ceiling law?

Correct Answer
verified

Why would most economists and all free-market economists) not favor price controls?

Correct Answer
verified
Most economists and all free-market econ...
View Answer

A binding minimum wage will increase the income of

Correct Answer
verified

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 Answer
verified

Correct Answer
verified
The public would initially be quite happ...
View Answer

Suppose Kate lives in a community with no price controls. What could she expect will happen if her town borders a community where there is a nonbinding price ceiling on most products?

Correct Answer
verified

Correct Answer
verified

Why does a surplus that occurs under a binding price floor increase over time?

Correct Answer
verified

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original, legal market price. What would be the positive and negative consequences to such a law?

Correct Answer
verified
The positive consequence would be for th...
View Answer

A market where exchanges occur despite price regulations is called an) _______market.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Refer to the accompanying figure for the next 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

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

Correct Answer
verified

What is the incentive to create a black market when a binding price ceiling exists?

Correct Answer
verified

If the price floor for corn is set at $5.00, what amount and type of disequilibrium will be present in the market for corn?

Correct Answer
verified

Exam 5: Price Controls

Use the following information to answer the next questions. Market for flat-screen TVs: Demand: Qd = 2,600 - 5P Supply: Qs = -1,000 + 10P -What would be the equilibrium quantity for flat-screen TVs?

Correct AnswerverifiedShow Answer

Why are the long-run consequences of a price control different from the short-run consequences of a price control? Be specific, and consider both price floors and price ceilings in your answer.

Correct AnswerverifiedThe long-run consequence of a price floo...View AnswerShow 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

Do all buyers benefit from a binding price ceiling?

Correct AnswerverifiedShow Answer

What is the long-run consequence of a price ceiling law?

Correct AnswerverifiedShow Answer

Why would most economists and all free-market economists) not favor price controls?

Correct AnswerverifiedMost economists and all free-market econ...View AnswerShow Answer

A binding minimum wage will increase the income of

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

Correct AnswerverifiedThe public would initially be quite happ...View AnswerShow Answer

Suppose Kate lives in a community with no price controls. What could she expect will happen if her town borders a community where there is a nonbinding price ceiling on most products?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why does a surplus that occurs under a binding price floor increase over time?

Correct AnswerverifiedShow Answer

Some states and localities have laws that make it illegal to resell event tickets at prices higher than the original, legal market price. What would be the positive and negative consequences to such a law?

Correct AnswerverifiedThe positive consequence would be for th...View AnswerShow Answer

A market where exchanges occur despite price regulations is called an) _______market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the accompanying figure for the next 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

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

Correct AnswerverifiedShow Answer

What is the incentive to create a black market when a binding price ceiling exists?

Correct AnswerverifiedShow Answer

If the price floor for corn is set at $5.00, what amount and type of disequilibrium will be present in the market for corn?

Correct AnswerverifiedShow Answer

Use the following information to answer the next questions. Market for flat-screen TVs: Demand: Q_d = 2,600 - 5P Supply: Q_s = -1,000 + 10P -What would be the equilibrium quantity for flat-screen TVs?

Correct Answer
verified

Correct Answer
verified
The long-run consequence of a price floo...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Most economists and all free-market econ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The public would initially be quite happ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The positive consequence would be for th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the accompanying figure for the next 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