Question 1

When the maximum legal price is below the market price wesay that there is a price:

Accepted Answer

A)  floor.
B)  stabilization.
C)  support.
D)  ceiling.E) None of the above
F) B) and D)

Question 2

An economy with permanent, universal price controls is inessence a:

Accepted Answer

A)  market economy.
B)  social economy.
C)  free economy.
D)  command economy.E) B) and C)
F) All of the above

Question 3

The influence of the minimum wage in the American economyis very small because most workers earn:

Accepted Answer

A)  more than the minimum wage.
B)  less than the minimum wage.
C)  more or less than the minimum wage.
D)  near the minimum wage.E) C) and D)
F) A) and B)

Question 4

A deadweight loss is the total of:

Accepted Answer

A)  consumer and producer surplus when all mutually profitable gains from trade are exploited.
B)  consumer and producer surplus when all mutually profitable gains from trade are not exploited.
C)  lost consumer and producer surplus when all mutually profitable gains from trade are exploited.
D)  lost consumer and producer surplus when all mutually profitable gains from trade are not exploited.(True Answer) CorrectE) None of the above
F) A) and B)

Question 5

Price ceilings create five important effects:

Accepted Answer

A)  shortages, reductions in product quality, wasteful lineups, a loss from gains to trade, and a misallocation of resources.(TrueAnswer ) Correct
B)  surpluses, increases in product quality, search costs, gains from trade, and resource attrition.
C)  excess demand, long lines, poor service, efficiency, and arbitrage.
D)  shortages, reduced time costs, low vacancy rates, blat, and deadweight loss.E) None of the above
F) All of the above

Question 6

Effective price ceilings cause misallocation of resourcesbecause scarce resources are usually not allocated to theirhighest value uses.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is TRUE?
Price floors setabove the equilibrium price cause:
I. shortages
II.surpluses
III. deadweight losses.

Accepted Answer

A)  I and III only
B)  II and III only
C)  III only
D)  I is true if demand is elastic, however II is true if demand is inelastic.E) A) and B)
F) A) and C)

Question 8

A minimum wage mostly creates unemployment among olderworkers.

Accepted Answer

A) True 
 B)False

Question 9

During the energy crisis of the 1970s, President Nixon orderedgas stations to close between 9:00 PM Saturday and 12:01 AMMonday, in an attempt to prevent wasteful and unnecessarySunday driving. This policy:

Accepted Answer

A)  proved effective in reducing the shortage of gasoline.
B)  gave people the incentive to fill up their tanks earlier in the week.
C)  indirectly caused many churches to close on Sunday.
D)  All of the answers are correct.E) A) and B)
F) B) and D)

Question 10

Price floors make it illegal to compete for more customers bylowering prices, so firms compete by offering customers:

Accepted Answer

A)  various options.
B)  more quantity.
C)  more discount.
D)  higher quality.E) None of the above
F) C) and D)

Question 11

(Figure: Price Ceilings and Consumer Valuation)  Refer to thefigure. Suppose a price ceiling of $3 goes into effect. If the goodssold are allocated to buyers randomly, what is the totalconsumer surplus in this market?

Accepted Answer

A)  $90
B)  $120
C)  $30
D)  $150E) B) and C)
F) A) and D)

Question 12

A legal maximum price at which a good can be sold is a price:

Accepted Answer

A)  stabilization.
B)  ceiling.
C)  support.
D)  floor.E) B) and D)
F) B) and C)

Question 13

Under rent control tenants can expect:

Accepted Answer

A)  lower rent and higher quality housing.
B)  lower rent and lower quality housing.
C)  higher rent and a shortage of housing.
D)  higher rent and a surplus of housing.E) A) and D)
F) B) and C)

Question 14

The best way to help the poor afford housing is by:

Accepted Answer

A)  using rent control.
B)  raising the minimum wage.
C)  issuing housing vouchers.
D)  raising payroll taxes.E) B) and C)
F) A) and B)

Question 15

Which of the following events occurred during the 1973-1974oil crisis in the United States?
I. Gas stations were ordered to be closed between 9 PM onSaturday and 12:01 AM on Monday
II.The government decided to allocate oil by command
III. The 55 mph speed limit was repealed.IV. Daylight savings time was implemented.

Accepted Answer

A)  I and IV only
B)  I, II, and III only
C)  I, II, and IV only
D)  I, III, and IV onlyE) A) and B)
F) A) and D)

Question 16

In situations of excess demand, sellers might lower quality whenthey are unable to raise prices because they wish to:

Accepted Answer

A)  reduce excess demand.
B)  raise their profit levels.
C)  decrease surpluses.
D)  raise their sales.E) A) and B)
F) A) and C)

Question 17

Under rent control, bribery is used to:

Accepted Answer

A)  allocate housing to the most deserving tenants.
B)  make the total price of a rental property (including the bribe)  less than the market price that would prevail without rentControls.
C)  make the total price of a rental property (including the bribe)  closer to the market price that would prevail without rentControls.
D)  allocate the housing to the poorest individuals in the market.E) B) and D)
F) B) and C)

Question 18

Which of the following is not an effect of a price floor?

Accepted Answer

A)  misallocation of resources
B)  deregulation
C)  surpluses
D)  wasteful increases in qualityE) A) and D)
F) B) and D)

Question 19

Accepted Answer

A)  $100; $80
B)  $80; $90
C)  $60; $75
D)  $40; $60E) A) and B)
F) B) and C)

Question 20

(Figure: Losses from Price Ceilings)  Refer to the figure. At aprice ceiling of $1, the area representing the total value ofwasted time is ________, and the area of the deadweight loss is________.

Accepted Answer

A)  ab; de
B)  bd; ce
C)  abdf; ce
D)  bc; deE) B) and C)
F) A) and D)

Exam 8: Perfect Competition

A minimum wage mostly creates unemployment among olderworkers.

Correct Answer
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Which of the following is not an effect of a price floor?

Correct Answer
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Correct Answer
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Under rent control, bribery is used to:

Correct Answer
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The best way to help the poor afford housing is by:

Correct Answer
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Effective price ceilings cause misallocation of resourcesbecause scarce resources are usually not allocated to theirhighest value uses.

Correct Answer
verified

A deadweight loss is the total of:

Correct Answer
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Which of the following statements is TRUE? Price floors setabove the equilibrium price cause: I. shortages II.surpluses III. deadweight losses.

Correct Answer
verified

During the energy crisis of the 1970s, President Nixon orderedgas stations to close between 9:00 PM Saturday and 12:01 AMMonday, in an attempt to prevent wasteful and unnecessarySunday driving. This policy:

Correct Answer
verified

Price floors make it illegal to compete for more customers bylowering prices, so firms compete by offering customers:

Correct Answer
verified

An economy with permanent, universal price controls is inessence a:

Correct Answer
verified

(Figure: Losses from Price Ceilings) Refer to the figure. At aprice ceiling of $1, the area representing the total value ofwasted time is , and the area of the deadweight loss is.

Correct Answer
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Correct Answer
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(Figure: Price Ceilings and Consumer Valuation) Refer to thefigure. Suppose a price ceiling of $3 goes into effect. If the goodssold are allocated to buyers randomly, what is the totalconsumer surplus in this market?

Correct Answer
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Under rent control tenants can expect:

Correct Answer
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In situations of excess demand, sellers might lower quality whenthey are unable to raise prices because they wish to:

Correct Answer
verified

A legal maximum price at which a good can be sold is a price:

Correct Answer
verified

When the maximum legal price is below the market price wesay that there is a price:

Correct Answer
verified

The influence of the minimum wage in the American economyis very small because most workers earn:

Correct Answer
verified

Price ceilings create five important effects:

Correct Answer
verified

Exam 8: Perfect Competition

A minimum wage mostly creates unemployment among olderworkers.

Correct AnswerverifiedShow Answer

Which of the following is not an effect of a price floor?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under rent control, bribery is used to:

Correct AnswerverifiedShow Answer

The best way to help the poor afford housing is by:

Correct AnswerverifiedShow Answer

Effective price ceilings cause misallocation of resourcesbecause scarce resources are usually not allocated to theirhighest value uses.

Correct AnswerverifiedShow Answer

A deadweight loss is the total of:

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE? Price floors setabove the equilibrium price cause: I. shortages II.surpluses III. deadweight losses.

Correct AnswerverifiedShow Answer

During the energy crisis of the 1970s, President Nixon orderedgas stations to close between 9:00 PM Saturday and 12:01 AMMonday, in an attempt to prevent wasteful and unnecessarySunday driving. This policy:

Correct AnswerverifiedShow Answer

Price floors make it illegal to compete for more customers bylowering prices, so firms compete by offering customers:

Correct AnswerverifiedShow Answer

An economy with permanent, universal price controls is inessence a:

Correct AnswerverifiedShow Answer

(Figure: Losses from Price Ceilings) Refer to the figure. At aprice ceiling of $1, the area representing the total value ofwasted time is ________, and the area of the deadweight loss is________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

(Figure: Price Ceilings and Consumer Valuation) Refer to thefigure. Suppose a price ceiling of $3 goes into effect. If the goodssold are allocated to buyers randomly, what is the totalconsumer surplus in this market?

Correct AnswerverifiedShow Answer

Under rent control tenants can expect:

Correct AnswerverifiedShow Answer

In situations of excess demand, sellers might lower quality whenthey are unable to raise prices because they wish to:

Correct AnswerverifiedShow Answer

A legal maximum price at which a good can be sold is a price:

Correct AnswerverifiedShow Answer

When the maximum legal price is below the market price wesay that there is a price:

Correct AnswerverifiedShow Answer

The influence of the minimum wage in the American economyis very small because most workers earn:

Correct AnswerverifiedShow Answer

Price ceilings create five important effects:

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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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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Correct Answer
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(Figure: Losses from Price Ceilings) Refer to the figure. At aprice ceiling of $1, the area representing the total value ofwasted time is , and the area of the deadweight loss is.

Correct Answer
verified

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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Correct Answer
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Correct Answer
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Correct Answer
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