Question 1

Price controls often generate

Accepted Answer

A)   more efficient markets.
B)   black markets.
C)   rapid adjustment to market-clearing prices.
D)   greater price flexibility.E) A) and B)
F) A) and C)

Question 2

Which of the following will cause, other things being equal, a movement along the supply curve for LED televisions?

Accepted Answer

A)   An improvement in the technology of producing LED televisions.
B)   An increase in resource costs for producing LED televisions.
C)   A reduction in the price of LED televisions.
D)   An expectation that the price of LED televisions will be lower in the future.E) All of the above
F) None of the above C

Question 3

What will happen when there is a rightward shift in the demand curve?

Accepted Answer

A)   The product price will instantaneously adjust downward.
B)   Product prices do not change in this situation.
C)   Producers will decrease the product price.
D)   A new, higher price is not instantaneously achieved, but the price will rise over time.E) B) and C)
F) B) and D) D

Question 4

A black market

Accepted Answer

A)   can arise when government imposes a price ceiling below the market clearing price.
B)   can arise when government imposes a price floor below the market clearing price.
C)   was created when after hours trading was permitted on some stock exchanges.
D)   is a market where products with outdated expiration dates are sold.E) B) and D)
F) A) and D)

Question 5

Price floors are designed to

Accepted Answer

A)   establish a minimum allowable price.
B)   allow free market prices to be achieved.
C)   create shortages where none existed before.
D)   none of the above.E) B) and C)
F) A) and D)

Question 6

If both the demand for and the supply of computers are increasing, which of the following statements is true?

Accepted Answer

A)   The consumer should buy a computer now since the price will be higher in the future.
B)   The consumer should wait and buy a computer later since the price will be lower in the future.
C)   The price of a computer will be the same in the future as it is now.
D)   It is impossible to know, given only this information, whether the prices of computers will go up or down in the future.E) A) and B)
F) All of the above

Question 7

Which of the following will tend to occur when a surplus exists in a market?

Accepted Answer

A)   supply will increase and demand will decrease until the surplus disappears.
B)   supply will decrease and demand will increase until the surplus disappears.
C)   the price will tend to rise over time.
D)   the price will tend to decrease over time.E) B) and C)
F) A) and D)

Question 8

An effective price ceiling usually generates

Accepted Answer

A)   fire sales as firms try to unload their excess inventories.
B)   higher nominal prices.
C)   the use of nonprice rationing devices.
D)   happy sellers and dissatisfied buyers.E) A) and B)
F) A) and C)

Question 9

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it. The producer surplus of the pen for that producer is

Accepted Answer

A)   $5.
B)   $2.
C)   $7.
D)   -$5.E) C) and D)
F) A) and B)

Question 10

In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?

Accepted Answer

A)   Price controls must be applied by governments.
B)   Relative prices must be able to adjust to market clearing levels.
C)   Tastes and preferences of consumers must adjust to eliminate surpluses or shortages.
D)   Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages.E) None of the above
F) B) and D)

Question 11

In which of the following situations will market clearing price decrease and the equilibrium quantity increase?

Accepted Answer

A)   an increase in demand with no change in supply
B)   an increase in supply with no change in demand
C)   a decrease in supply with no change in demand
D)   a decrease in demand with no change in supplyE) A) and D)
F) B) and D)

Question 12

When supply and demand for a product decrease simultaneously, we

Accepted Answer

A)   can predict that both equilibrium price and quantity will increase.
B)   can predict that both equilibrium price and quantity will decrease.
C)   cannot predict equilibrium price, but know that equilibrium quantity will decrease.
D)   cannot predict the change in either the equilibrium quantity or equilibrium price.E) A) and B)
F) B) and D)

Question 13

As compared to the market clearing price, the total amount of consumer surplus and producer surplus is

Accepted Answer

A)   greater for a government-imposed price floor that is higher than that market clearing price.
B)   greater for a government-imposed price ceiling that is lower than that market clearing price.
C)   the same as a government-imposed price floor that is higher than that market clearing price.
D)   smaller for a government-imposed price ceiling that is lower than that market clearing price.E) B) and D)
F) A) and D)

Question 14

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the ________ and supply shifts to the ________.

Accepted Answer

A)   left, left
B)   left, right
C)   right, left
D)   right, rightE) All of the above
F) A) and B)

Question 15

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.E) A) and D)
F) All of the above B

Question 16

Markets tend to

Accepted Answer

A)   exist primarily in towns or cities.
B)   increase transaction costs.
C)   reduce transaction costs.
D)   make exchange more difficult.E) All of the above
F) C) and D)

Question 17

Which of the following is an example of a price ceiling?

Accepted Answer

A)   The minimum wage
B)   Agricultural price supports
C)   Rent controls
D)   None of the above is correctE) A) and D)
F) A) and C)

Question 18

The income of consumers increases. and the wage rate in the DVD industry increases. As a result,

Accepted Answer

A)   the price of DVDs stays the same and the quantity sold can either increase or decrease, depending on whether the change in demand is greater than the change in supply.
B)   the price of DVDs increases and the quantity sold can either increase, decrease or stay the same depending on whether the change in demand was greater than the change in supply.
C)   the equilibrium quantity sold increases and price can either increase or decrease, depending on whether the change in demand is greater than the change in supply.
D)   the equilibrium quantity sold can either increase or decrease and the price can either increase or decrease, depending on whether the change in demand was greater than the change in supply.E) None of the above
F) A) and D)

Question 19

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.E) All of the above
F) None of the above

Question 20

Who bears the costs of a program to control rents at a maximum level?

Accepted Answer

A)   Landlords or owners of housing units
B)   Consumers who face difficulty moving to a more suitable apartment
C)   Homeless who cannot find rental units
D)   All of theseE) A) and D)
F) B) and C)

Exam 4: Extensions of Demand and Supply Analysis

Price controls often generate

Correct AnswerverifiedShow Answer

Which of the following will cause, other things being equal, a movement along the supply curve for LED televisions?

Correct AnswerverifiedC

What will happen when there is a rightward shift in the demand curve?

Correct AnswerverifiedD

A black market

Correct AnswerverifiedShow Answer

Price floors are designed to

Correct AnswerverifiedShow Answer

If both the demand for and the supply of computers are increasing, which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following will tend to occur when a surplus exists in a market?

Correct AnswerverifiedShow Answer

An effective price ceiling usually generates

Correct AnswerverifiedShow Answer

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it. The producer surplus of the pen for that producer is

Correct AnswerverifiedShow Answer

In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?

Correct AnswerverifiedShow Answer

In which of the following situations will market clearing price decrease and the equilibrium quantity increase?

Correct AnswerverifiedShow Answer

When supply and demand for a product decrease simultaneously, we

Correct AnswerverifiedShow Answer

As compared to the market clearing price, the total amount of consumer surplus and producer surplus is

Correct AnswerverifiedShow Answer

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the ________ and supply shifts to the ________.

Correct AnswerverifiedShow Answer

An example of a black market is

Correct AnswerverifiedB

Markets tend to

Correct AnswerverifiedShow Answer

Which of the following is an example of a price ceiling?

Correct AnswerverifiedShow Answer

The income of consumers increases. and the wage rate in the DVD industry increases. As a result,

Correct AnswerverifiedShow Answer

A price ceiling is

Correct AnswerverifiedShow Answer

Who bears the costs of a program to control rents at a maximum level?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified
D

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

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, demand shifts to the and supply shifts to the .

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified