Question 1

An effective price ceiling:

Accepted Answer

A)  will cause quantity demanded to exceed quantity supplied.
B)  will cause quantity supplied to exceed quantity demanded.
C)  will increase total well being.
D)  will set a legal maximum price in a market.E) A) and D)
F) A) and C)

Question 2

An unintended consequence of price ceilings is:

Accepted Answer

A)  non-price rationing must occur,and can lead to bribes.
B)  the loss of surplus always outweighs the benefits of the policy.
C)  the transfer of surplus from producer to consumer rarely is recognized.
D)  None of these is correct.E) None of the above
F) A) and C)

Question 3

Governments may choose to intervene in a market in an attempt to:

Accepted Answer

A)  encourage the consumption of certain goods.
B)  discourage the consumption of certain goods.
C)  redistribute surplus.
D)  All of these are true.E) C) and D)
F) None of the above

Question 4

Price controls:

Accepted Answer

A)  are a regulation that sets a maximum or minimum legal price for a particular good.
B)  prevent the market from reaching a new equilibrium when the market shifts.
C)  divided into two categories-price ceilings and price floors.
D)  All of these are true.E) A) and C)
F) A) and D)

Question 5

Positive analysis:

Accepted Answer

A)  involves the formulation and testing of hypotheses.
B)  involves value judgments concerning the desirability of alternative outcomes.
C)  weighs the fairness of a policy.
D)  examines if the outcome is desirable.E) C) and D)
F) A) and D)

Question 6

If there is a sole producer of a good,and he faces no threat of competition,it is likely that:

Accepted Answer

A)  government intervention could increase total surplus.
B)  he is acting inefficiently.
C)  he is charging an inefficiently high price.
D)  All of these are true.E) B) and D)
F) B) and C)

Question 7

Market failures are:

Accepted Answer

A)  situations in which the assumption of efficient,competitive markets fail to hold.
B)  situations in which the assumption of efficient,competitive markets holds.
C)  situations in which the assumption of inefficient,competitive markets fail to hold.
D)  situations in which the assumption of inefficient,noncompetitive markets hold.E) B) and C)
F) All of the above

Question 8

An unintended consequence of price floors is:

Accepted Answer

A)  non-price rationing must occur,and can lead to bribes.
B)  the cost to taxpayers if the government buys all surplus.
C)  the loss of surplus always outweighs the benefits of the policy.
D)  the transfer of surplus from consumer to producer is rarely recognized.E) B) and D)
F) All of the above

Question 9

Governments may attempt to raise,lower,or stabilize prices because:

Accepted Answer

A)  the market's equilibrium is not maximizing total surplus.
B)  governments changing the price in the market could increase consumer surplus and not harm producers.
C)  market failures occur.
D)  doing so will always create a better outcome.E) B) and C)
F) A) and D)

Question 10

The government is deciding where to place a tax of $0.50 because they want to raise revenues.In which market will they likely generate more revenue?

Accepted Answer

A)  In markets with inelastic supply and demand,since the decrease in quantity traded will be smaller than in a market with elastic supply and demand curves
B)  In markets with elastic supply and demand,since the decrease in quantity traded will be smaller than in a market with inelastic supply and demand curves
C)  In markets with inelastic supply and demand,since the increase in quantity traded will be smaller than in a market with elastic supply and demand curves
D)  In markets with elastic supply and demand,since the increase in quantity traded will be smaller than in a market with inelastic supply and demand curvesE) C) and D)
F) B) and D)

Question 11

Situations in which the assumption of efficient,competitive markets fails to hold are called:

Accepted Answer

A)  market failures.
B)  inelastic-response markets.
C)  missing markets.
D)  market interventions.E) A) and B)
F) C) and D)

Question 12

A prominent argument against the use of price ceilings is:

Accepted Answer

A)  they are unfair.
B)  they lead to a surplus and a waste of society's resources.
C)  they keep markets from minimizing the deadweight loss.
D)  None of these is used as an argument against price ceilings.E) A) and C)
F) C) and D)

Question 13

An effective price floor:

Accepted Answer

A)  will cause quantity demanded to exceed quantity supplied.
B)  will cause quantity supplied to exceed quantity demanded.
C)  will increase total well being.
D)  will set a legal maximum price in a market.E) C) and D)
F) A) and D)

Exam 6: Government Intervention

An effective price floor:

Correct Answer
verified

Governments may choose to intervene in a market in an attempt to:

Correct Answer
verified

An unintended consequence of price floors is:

Correct Answer
verified

Governments may attempt to raise,lower,or stabilize prices because:

Correct Answer
verified

The government is deciding where to place a tax of $0.50 because they want to raise revenues.In which market will they likely generate more revenue?

Correct Answer
verified

Positive analysis:

Correct Answer
verified

An effective price ceiling:

Correct Answer
verified

Situations in which the assumption of efficient,competitive markets fails to hold are called:

Correct Answer
verified

An unintended consequence of price ceilings is:

Correct Answer
verified

If there is a sole producer of a good,and he faces no threat of competition,it is likely that:

Correct Answer
verified

A prominent argument against the use of price ceilings is:

Correct Answer
verified

Price controls:

Correct Answer
verified

Market failures are:

Correct Answer
verified

Exam 6: Government Intervention

An effective price floor:

Correct AnswerverifiedShow Answer

Governments may choose to intervene in a market in an attempt to:

Correct AnswerverifiedShow Answer

An unintended consequence of price floors is:

Correct AnswerverifiedShow Answer

Governments may attempt to raise,lower,or stabilize prices because:

Correct AnswerverifiedShow Answer

The government is deciding where to place a tax of $0.50 because they want to raise revenues.In which market will they likely generate more revenue?

Correct AnswerverifiedShow Answer

Positive analysis:

Correct AnswerverifiedShow Answer

An effective price ceiling:

Correct AnswerverifiedShow Answer

Situations in which the assumption of efficient,competitive markets fails to hold are called:

Correct AnswerverifiedShow Answer

An unintended consequence of price ceilings is:

Correct AnswerverifiedShow Answer

If there is a sole producer of a good,and he faces no threat of competition,it is likely that:

Correct AnswerverifiedShow Answer

A prominent argument against the use of price ceilings is:

Correct AnswerverifiedShow Answer

Price controls:

Correct AnswerverifiedShow Answer

Market failures are:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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