Question 1

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.

Question 2

-Refer to Situation 4-1. An economist would have most likely predicted that the oil embargo imposed in 1974 would result in a

Accepted Answer

A)  leftward shift in the supply (curve)  of gasoline.
B)  rightward shift in the supply (curve)  of gasoline.
C)  leftward shift in the demand (curve)  for gasoline.
D)  rightward shift in the demand (curve)  for gasoline.
E)  both a and d

Question 3

Exhibit 4-9
 
-Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. The number of units that would be exchanged in this market would be

Accepted Answer

A)  150, since that is the equilibrium quantity and the price ceiling is below the equilibrium price.
B)  220, since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied) .
C)  90, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded) .
D)  155, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question 4

​
Exhibit 4-11
​
 
-Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. The result of the price floor would be a ____________ of ______ units of good ABC.

Accepted Answer

A)  shortage; 110
B)  surplus; 110
C)  shortage; 30
D)  surplus; 30

Question 5

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 c

Question 6

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.

Question 7

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 statements 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.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

If goods are not rationed according to price, if follows that

Accepted Answer

A)  they won't get rationed at all.
B)  some non-price rationing device will be used to ration the goods.
C)  first-come-first-served will necessarily be the rationing device used in the market.
D)  there will be surpluses in the market.
E)  none of the above

Question 10

Exhibit 4-8
 
-Refer to Exhibit 4-8. If the wheat market is in competitive equilibrium the producers' surplus will equal

Accepted Answer

A)  area 1 + 2 + 3
B)  area 1 + 2 + 4
C)  area 3 + 5
D)  area 1 + 2 + 3 + 4 + 5
E)  area 6

Question 11

The number of unskilled workers employed before and after a change in the minimum wage is found to be the same. This means

Accepted Answer

A)  the minimum wage change did not affect the unskilled labor market.
B)  nothing, unless we also know that the number of hours worked by each worker has not changed.
C)  the minimum wage could be below the equilibrium wage for unskilled labor.
D)  either b or c
E)  none of the above

Question 12

Exhibit 4-2
 
-Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. How many fewer units would be exchanged at the price ceiling compared to the number that would be exchanged at the equilibrium price?

Accepted Answer

A)  200 units.
B)  100 units.
C)  400 units.
D)  800 units.

Question 13

Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of an increase in minimum wage.

Accepted Answer

If the minimum wage is imposed above the...

Question 14

Exhibit 4-1
 
-Refer to Exhibit 4-1. How many fewer units are bought and sold because of the price ceiling than would have been bought and sold at the equilibrium price?

Accepted Answer

A)  50
B)  60
C)  65
D)  100

Question 15

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 - Q1

Question 16

​
Exhibit 4-11
​
 
-Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units.

Accepted Answer

A)  20
B)  40
C)  60
D)  100

Question 17

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.

Question 18

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 would be a shortage of the good if a price floor is set at 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.

Question 19

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.

Question 20

The need for a rationing device results from scarcity.

Accepted Answer

A) True 
 B)False

Exam 4: Prices Free Controlled and Relative

Price ceilings and price floors

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

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

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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.

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The need for a rationing device results from scarcity.

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If goods are not rationed according to price, if follows that

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​ Exhibit 4-11 ​ -Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units.

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The number of unskilled workers employed before and after a change in the minimum wage is found to be the same. This means

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

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

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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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Exhibit 4-1 -Refer to Exhibit 4-1. How many fewer units are bought and sold because of the price ceiling than would have been bought and sold at the equilibrium price?

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-Refer to Situation 4-1. An economist would have most likely predicted that the oil embargo imposed in 1974 would result in a

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Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. The number of units that would be exchanged in this market would be

Correct AnswerverifiedShow Answer

Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of an increase in minimum wage.

Correct AnswerverifiedIf the minimum wage is imposed above the...View AnswerShow 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 4-8 -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 4-11 ​ -Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. The result of the price floor would be a ____________ of ______ units of good ABC.

Correct AnswerverifiedShow Answer

Exhibit 4-2 -Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. How many fewer units would be exchanged at the price ceiling compared to the number that would be exchanged at the equilibrium price?

Correct AnswerverifiedShow Answer

Exhibit 4-8 -Refer to Exhibit 4-8. If the wheat market is in competitive equilibrium the producers' surplus will equal

Correct AnswerverifiedShow Answer

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Exhibit 4-11 -Refer to Exhibit 4-11. Suppose that the government imposes a price ceiling in the market for good ABC at a price of $4. The number of units that would be exchanged in the market for good ABC at the price ceiling would be _________ units.

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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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If the minimum wage is imposed above the...
View Answer

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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 quantity of wheat purchased at P_F?

Correct Answer
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Exhibit 4-11 -Refer to Exhibit 4-11. Suppose that the government imposes a price floor in the market for good ABC at a price of $7. The result of the price floor would be a ______ of units of good ABC.

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