A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.. A price ceiling set above the equilibrium price causes quantity demanded to exceed
Trang 1Supply, Demand, and Government Policies
TRUE/FALSE
1 Economic policies often have effects that their architects did not intend or anticipate
NAT: Analytic LOC: The study of economics and definitions of economics
2 Rent-control laws dictate a minimum rent that landlords may charge tenants
MSC: Definitional
3 Minimum-wage laws dictate the lowest wage that firms may pay workers
MSC: Definitional
4 Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers
MSC: Definitional
5 Price controls can generate inequities
MSC: Definitional
6 Policymakers use taxes to raise revenue for public purposes and to influence market outcomes
MSC: Definitional
7 If a good or service is sold in a competitive market free of government regulation, then the price of the good orservice adjusts to balance supply and demand
MSC: Definitional
8 At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell
MSC: Definitional
9 A price ceiling is a legal minimum on the price at which a good or service can be sold
MSC: Definitional
10 A price ceiling set above the equilibrium price is not binding
MSC: Interpretive
371
Trang 211 If a price ceiling is not binding, then it will have no effect on the market.
MSC: Interpretive
12 To be binding, a price ceiling must be set above the equilibrium price
MSC: Interpretive
13 A price ceiling set below the equilibrium price is binding
MSC: Interpretive
14 A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied
MSC: Interpretive
15 A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied
MSC: Interpretive
16 A binding price ceiling causes quantity demanded to be less than quantity supplied
MSC: Interpretive
17 A price ceiling set below the equilibrium price causes a shortage in the market
MSC: Interpretive
18 A price ceiling set above the equilibrium price causes a surplus in the market
MSC: Interpretive
19 A binding price ceiling causes a shortage in the market
MSC: Interpretive
20 When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so
MSC: Interpretive
21 Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling
MSC: Interpretive
22 Price ceilings are typically imposed to benefit buyers
MSC: Interpretive
Trang 323 Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.
MSC: Interpretive
24 All buyers benefit from a binding price ceiling
MSC: Interpretive
25 A binding price ceiling may not help all consumers, but it does not hurt any consumers
MSC: Interpretive
26 When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers
MSC: Definitional
27 The rationing mechanisms that develop under binding price ceilings are usually inefficient
MSC: Interpretive
28 Price is the rationing mechanism in a free, competitive market
MSC: Interpretive
29 Prices are inefficient rationing devices
MSC: Interpretive
30 When free markets ration goods with prices, it is both efficient and impersonal
MSC: Interpretive
31 When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good
MSC: Interpretive
32 If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market
MSC: Applicative
33 If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market
MSC: Applicative
Trang 434 A price ceiling caused the gasoline shortage of 1973 in the United States.
MSC: Interpretive
35 One common example of a price ceiling is rent control
MSC: Definitional
36 The goal of rent control is to help the poor by making housing more affordable
MSC: Definitional
37 Economists argue that rent control is a highly efficient way to help the poor raise their standard of living
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Economists | Rent control MSC: Interpretive
38 Because supply and demand are inelastic in the short run, the initial shortage caused by rent control is large
MSC: Definitional
39 The primary effect of rent control in the short run is to reduce rents
MSC: Definitional
40 The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run
MSC: Interpretive
41 The effects of rent control in the long run include lower rents and lower-quality housing
MSC: Interpretive
42 Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower
MSC: Interpretive
43 In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior
MSC: Definitional
44 A price floor is a legal minimum on the price at which a good or service can be sold
MSC: Definitional
Trang 545 A price floor set above the equilibrium price is not binding.
MSC: Interpretive
46 If a price floor is not binding, then it will have no effect on the market
MSC: Interpretive
47 To be binding, a price floor must be set above the equilibrium price
MSC: Interpretive
48 A price floor set below the equilibrium price is binding
MSC: Interpretive
49 A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded
MSC: Interpretive
50 A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded
MSC: Interpretive
51 A binding price floor causes quantity supplied to be less than quantity demanded
MSC: Interpretive
52 A price floor set below the equilibrium price causes a surplus in the market
MSC: Interpretive
53 A price floor set above the equilibrium price causes a surplus in the market
MSC: Interpretive
54 A binding price floor causes a shortage in the market
MSC: Interpretive
55 When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot
do so
MSC: Interpretive
56 Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor
MSC: Interpretive
Trang 657 Price floors are typically imposed to benefit buyers.
MSC: Interpretive
58 Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price
MSC: Interpretive
59 Not all sellers benefit from a binding price floor
MSC: Interpretive
60 A binding price floor may not help all sellers, but it does not hurt any sellers
MSC: Interpretive
61 The rationing mechanisms that develop under binding price floors are usually efficient
MSC: Interpretive
62 When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good
MSC: Interpretive
63 If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airlinetickets, then fewer airline tickets will be sold than at the market equilibrium
MSC: Applicative
64 If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airlinetickets, then fewer airline tickets will be sold than at the market equilibrium
MSC: Applicative
65 One common example of a price floor is the minimum wage
MSC: Definitional
66 The goal of the minimum wage is to ensure workers a minimally adequate standard of living
MSC: Definitional
67 The United States is the only country in the world with minimum-wage laws
MSC: Interpretive
Trang 768 States in the U.S may mandate minimum wages above the federal level.
MSC: Interpretive
69 In the labor markets, workers determine the supply of labor and firms determine the demand
NAT: Analytic LOC: Labor markets
TOP: Labor demand | Labor supply MSC: Definitional
70 In an unregulated labor market, the wage adjusts to balance labor supply and labor demand
MSC: Interpretive
71 A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied
MSC: Interpretive
72 A binding minimum wage creates unemployment
NAT: Analytic LOC: Labor markets
TOP: Minimum wage | Unemployment MSC: Interpretive
73 A binding minimum wage may not help all workers, but it does not hurt any workers
MSC: Interpretive
74 A binding minimum wage raises the incomes of those workers who have jobs, but it lowers the incomes of workers who cannot find jobs
MSC: Definitional
75 The economy contains many labor markets for different types of workers
MSC: Definitional
76 The impact of the minimum wage depends on the skill and experience of the worker
MSC: Definitional
77 Workers with high skills and much experience are not typically affected by the minimum wage
MSC: Interpretive
78 The minimum wage has its greatest impact on the market for teenage labor
MSC: Definitional
79 The minimum wage is more often binding for teenagers than for other members of the labor force
MSC: Definitional
Trang 880 Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage
employment 10 percent
MSC: Definitional
81 A large majority of economists favor eliminating the minimum wage
MSC: Interpretive
82 Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off
MSC: Definitional
83 If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist
MSC: Applicative
Figure 6-17
D S
84 Refer to Figure 6-17 A price ceiling set at $30 would result in a shortage of 20 units.
MSC: Applicative
85 Refer to Figure 6-17 A price ceiling set at $70 would result in a shortage of 40 units.
MSC: Applicative
86 Refer to Figure 6-17 A price floor set at $60 would result in a surplus of 20 units.
MSC: Applicative
87 Refer to Figure 6-17 A price floor set at $40 would result in a surplus of 20 units.
MSC: Applicative
Trang 988 Most economists are in favor of price controls as a way of allocating resources in the economy.
MSC: Interpretive
89 When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society’s resources
MSC: Definitional
90 Price controls often hurt those they are trying to help
MSC: Definitional
91 Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costsassociated with them
MSC: Interpretive
92 The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy
MSC: Definitional
93 A tax on sellers shifts the supply curve but not the demand curve
MSC: Interpretive
94 A tax on sellers shifts the supply curve to the left
MSC: Interpretive
95 A tax on sellers increases supply
MSC: Interpretive
96 A tax on sellers and an increase in input prices affect the supply curve in the same way
MSC: Interpretive
97 A tax of $1 on sellers shifts the supply curve upward by exactly $1
MSC: Applicative
98 A tax of $1 on sellers always increases the equilibrium price by $1
MSC: Applicative
Trang 1099 A tax on sellers reduces the size of a market.
MSC: Interpretive
100 A tax on sellers increases the quantity of the good sold in the market
MSC: Interpretive
101 If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers
MSC: Interpretive
102 A tax on sellers usually causes buyers to pay more the good and sellers to receive less for the good than they did before the tax was levied
MSC: Interpretive
103 A tax on buyers shifts the demand curve and the supply curve
MSC: Interpretive
104 A tax on buyers shifts the demand curve to the right
MSC: Interpretive
105 A tax on buyers decreases demand
MSC: Interpretive
106 A tax of $1 on buyers shifts the demand curve downward by exactly $1
MSC: Applicative
107 A tax of $1 on buyers always decreases the equilibrium price by $1
MSC: Applicative
108 A tax on buyers increases the size of a market
MSC: Interpretive
109 A tax on buyers decreases the quantity of the good sold in the market
MSC: Interpretive
110 If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers
MSC: Interpretive
Trang 11111 A tax on buyers usually causes buyers to pay more the good and sellers to receive less for the good than they did before the tax was levied.
MSC: Interpretive
112 Whether a tax is levied on sellers or buyers, taxes discourage market activity
MSC: Definitional
113 Whether a tax is levied on sellers or buyers, taxes encourage market activity
MSC: Definitional
114 Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes
MSC: Definitional
115 Taxes levied on sellers and taxes levied on buyers are equivalent
MSC: Definitional
116 The wedge between the buyers’ price and the sellers’ price is the same, regardless of whether the tax is levied
on buyers or sellers
MSC: Definitional
117 The tax incidence depends on whether the tax is levied on buyers or sellers
MSC: Interpretive
118 Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax
MSC: Interpretive
119 A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lowerprice, and fewer golf clubs to be sold
MSC: Applicative
120 FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers
MSC: Definitional
121 Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers
MSC: Interpretive
Trang 12122 Buyers and sellers always share the burden of a tax equally.
MSC: Interpretive
123 Buyers and sellers rarely share the burden of a tax equally
MSC: Interpretive
124 Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers
MSC: Interpretive
125 Who bears the majority of a tax burden depends on the relative elasticity of supply and demand
MSC: Interpretive
126 If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear
a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers
MSC: Interpretive
127 If the demand curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear
a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers
MSC: Interpretive
128 A tax burden falls more heavily on the side of the market that is less elastic
MSC: Definitional
129 The tax burden falls more heavily on the side of the market that is more inelastic
MSC: Definitional
130 A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market
MSC: Analytical
131 Most labor economists believe that the supply of labor is much more elastic than the demand
MSC: Definitional
132 Workers, rather than firms, bear most of the burden of the payroll tax
MSC: Definitional
Trang 13133 Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.
be divided into those who lose their jobs as a result of the minimum wage (the competitive equilibrium quantity of labor minus the quantity demanded at the minimum wage, q1-q0), and those who enter the market as a result of the higher wage but cannot find employment (quantity of labor supplied at the minimum wage minus the competitive equilibrium quantity, q2-q1) The buyers of the labor (employers) are also worse off because they have to pay a higher wage for labor and, hence, hire a smaller quantity
MSC: Interpretive
Trang 14a For this example, a $300 price ceiling would cause a shortage of 4,000 bicycles A price ceiling
is binding if it is set at any price below equilibrium price Since the equilibrium price in this market is $500, this would be a binding price ceiling
b For this example, a $700 price floor would cause a surplus of 4,000 bicycles A price floor is binding if it is set at any price above equilibrium price Since the equilibrium price in this market is $500, this would be a binding price floor
c More than one reason may exist for policymakers to impose a price ceiling or price floor in a market Often this is done in an attempt to increase equality; a price ceiling may be imposed if policymakers perceive the equilibrium price to be unfair to buyers, and a price floor may be imposed if policymakers perceive the equilibrium price to be unfair to sellers
LOC: Supply and demand TOP: Price ceilings | Price floors
MSC: Applicative
Trang 153 Using the graph shown, answer the following questions.
a What was the equilibrium price in this market before the tax?
b What is the amount of the tax?
c How much of the tax will the buyers pay?
d How much of the tax will the sellers pay?
e How much will the buyer pay for the product after the tax is imposed?
f How much will the seller receive after the tax is imposed?
g As a result of the tax, what has happened to the level of market activity?
g As a result of the tax, the level of market activity has fallen, from 60 units bought and sold to only
50 units bought and sold
MSC: Applicative
4 Using the graph shown, answer the following questions
a What was the equilibrium price in this market before the tax?
b What is the amount of the tax?
c How much of the tax will the buyers pay?
d How much of the tax will the sellers pay?
Trang 16e How much will the buyer pay for the product after the tax is imposed?
f How much will the seller receive after the tax is imposed?
g As a result of the tax, what has happened to the level of market activity?
g As a result of the tax, the level of market activity has fallen, from 10 units bought and sold to only
8 units bought and sold
MSC: Applicative
Trang 175 Using the graph shown, in which the vertical distance between points A and B represents the tax in the market, answer the following questions.
a What was the equilibrium price and quantity in this market before the tax?
b What is the amount of the tax?
c How much of the tax will the buyers pay?
d How much of the tax will the sellers pay?
e How much will the buyer pay for the product after the tax is imposed?
f How much will the seller receive after the tax is imposed?
g As a result of the tax, what has happened to the level of market activity?
D
S
B A
ANS:
a Equilibrium price was $8 and equilibrium quantity was 8,000 units
b The tax is $5
c Buyers will pay $3
d Sellers will pay $2
e $11
f $6
g Instead of 8,000 units bought and sold, only 6,000 will be bought and sold
MSC: Applicative
Trang 186 How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.ANS:
The tax burden falls more heavily on the side of the market that is more inelastic
MSC: Interpretive
Sec00 - Supply, Demand, and Government Policies
MULTIPLE CHOICE
1 Which of the following is not correct?
a Economists have two roles: scientist and policy adviser
b As scientists, economists develop and test theories to explain the world around them
c Economic policies rarely have effects that their architects did not intend or anticipate
d As policy advisers, economists use their theories to help change the world for the better
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Economists | Public policy MSC: Definitional
Trang 192 Rent-control laws dictate
a the exact rent that landlords must charge tenants
b a maximum rent that landlords may charge tenants
c a minimum rent that landlords may charge tenants
d a minimum rent and a maximum rent that landlords may charge tenants
MSC: Definitional
3 Minimum-wage laws dictate
a the exact wage that firms must pay workers
b a maximum wage that firms may pay workers
c a minimum wage that firms may pay workers
d a minimum wage and a maximum wage that firms may pay workers
MSC: Definitional
4 Price controls are usually enacted
a as a means of raising revenue for public purposes
b when policymakers believe that the market price of a good or service is unfair to buyers or sellers
c when policymakers detect inefficiencies in a market
d All of the above are correct
MSC: Interpretive
5 The presence of a price control in a market for a good or service usually is an indication that
a an insufficient quantity of the good or service was being produced in that market to meet the
public’s need
b the usual forces of supply and demand were not able to establish an equilibrium price in that
market
c policymakers believed that the price that prevailed in that market in the absence of price controls
was unfair to buyers or sellers
d policymakers correctly believed that, in that market, price controls would generate no inequities of their own
MSC: Interpretive
6 Price controls
a always produce a fair outcome
b always produce an efficient outcome
c can generate inequities of their own
d Both (a) and (b) are correct
MSC: Interpretive
7 Policymakers use taxes
a to raise revenue for public purposes, but not to influence market outcomes
b both to raise revenue for public purposes and to influence market outcomes
c when they realize that price controls alone are insufficient to correct market inequities
d only in those markets in which the burden of the tax falls clearly on the sellers
MSC: Definitional
Trang 20Sec01 - Supply, Demand, and Government Policies - Controls on Prices
MULTIPLE CHOICE
1 In a competitive market free of government regulation,
a price adjusts until quantity demanded is greater than quantity supplied
b price adjusts until quantity demanded is less than quantity supplied
c price adjusts until quantity demanded equals quantity supplied
d supply adjusts to meet demand at every price
MSC: Definitional
3 A price ceiling is
a often imposed on markets in which “cutthroat competition” would prevail without a price ceiling
b a legal maximum on the price at which a good can be sold
c often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling
d All of the above are correct
MSC: Interpretive
5 If a price ceiling is not binding, then
a the equilibrium price is above the price ceiling
b the equilibrium price is below the price ceiling
c it has no legal enforcement mechanism
d More than one of the above is correct
MSC: Interpretive
Trang 216 If a price ceiling is not binding, then
a there will be a surplus in the market
b there will be a shortage in the market
c the market will be less efficient than it would be without the price ceiling
d there will be no effect on the market price or quantity sold
MSC: Interpretive
7 If a nonbinding price ceiling is imposed on a market, then
a the quantity sold in the market will decrease
b the quantity sold in the market will stay the same
c the price in the market will increase
d the price in the market will decrease
MSC: Interpretive
8 A price ceiling will be binding only if it is set
a equal to the equilibrium price
b above the equilibrium price
c below the equilibrium price
d either above or below the equilibrium price
MSC: Interpretive
9 A price ceiling is binding when it is set
a above the equilibrium price, causing a shortage
b above the equilibrium price, causing a surplus
c below the equilibrium price, causing a shortage
d below the equilibrium price, causing a surplus
MSC: Interpretive
10 To say that a price ceiling is binding is to say that the price ceiling
a results in a surplus
b is set above the equilibrium price
c causes quantity demanded to exceed quantity supplied
d All of the above are correct
MSC: Interpretive
11 A shortage results when
a a nonbinding price ceiling is imposed on a market
b a nonbinding price ceiling is removed from a market
c a binding price ceiling is imposed on a market
d a binding price ceiling is removed from a market
MSC: Interpretive
Trang 2212 The imposition of a binding price ceiling on a market causes quantity demanded to be
a greater than quantity supplied
b less than quantity supplied
c equal to quantity supplied
d Both (a) and (b) are possible
MSC: Interpretive
13 If a price ceiling is a binding constraint on a market, then
a the equilibrium price must be below the price ceiling
b the quantity supplied must exceed the quantity demanded
c sellers cannot sell all they want to sell at the price ceiling
d buyers cannot buy all they want to buy at the price ceiling
MSC: Interpretive
14 Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?
a A smaller quantity of the good is bought and sold after the price ceiling becomes effective
b A smaller quantity of the good is demanded after the price ceiling becomes effective
c A larger quantity of the good is supplied after the price ceiling becomes effective
d All of the above are correct
MSC: Interpretive
15 If a binding price ceiling is imposed on the computer market, then
a the demand for computers will increase
b the supply of computers will decrease
c a shortage of computers will develop
d All of the above are correct
MSC: Interpretive
16 If a binding price ceiling is imposed on the computer market, then
a the quantity of computers demanded will increase
b the quantity of computers supplied will decrease
c a shortage of computers will develop
d All of the above are correct
MSC: Interpretive
17 Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical As a result of the price ceiling,
a the demand curve for physicals shifts to the right
b the supply curve for physicals shifts to the left
c the quantity demanded of physicals increases and the quantity supplied of physicals decreases
d the number of physicals performed stays the same
MSC: Interpretive
Trang 2318 Suppose the government has imposed a price ceiling on televisions Which of the following events could transform the price ceiling from one that is not binding into one that is binding?
a Firms expect the price of televisions to fall in the future
b The number of firms selling televisions decreases
c Consumers' income decreases, and televisions are a normal good
d The number of consumers buying televisions decreases
MSC: Analytical
19 Suppose the government has imposed a price ceiling on cellular phones Which of the following events could transform the price ceiling from one that is binding to one that is not binding?
a Cellular phones become more popular
b Traditional land line phones become more expensive
c The components used to produce cellular phones become more expensive
d A technological advance makes cellular phone production less expensive
MSC: Analytical
20 If the government removes a binding price ceiling from a market, then the price paid by buyers will
a increase and the quantity sold in the market will increase
b increase and the quantity sold in the market will decrease
c decrease and the quantity sold in the market will increase
d decrease and the quantity sold in the market will decrease
MSC: Analytical
21 If the government removes a binding price ceiling from a market, then the price received by sellers will
a decrease and the quantity sold in the market will decrease
b decrease and the quantity sold in the market will increase
c increase and the quantity sold in the market will decrease
d increase and the quantity sold in the market will increase
MSC: Analytical
22 When a binding price ceiling is imposed on a market,
a price no longer serves as a rationing device
b the quantity supplied at the price ceiling exceeds the quantity that would have been supplied
without the price ceiling
c all buyers benefit
d All of the above are correct
MSC: Interpretive
23 When a binding price ceiling is imposed on a market to benefit buyers,
a every buyer in the market benefits
b every seller in the market benefits, too
c every buyer who wants to buy the good will be able to do so, but only if they wait in long lines
d some buyers will not be able to buy any amount of the good
MSC: Interpretive
Trang 2424 When a binding price ceiling is imposed on a market to benefit buyers,
a no buyers actually do benefit
b some buyers benefit, but no buyers are harmed
c some buyers benefit and some buyers are harmed
d all buyers benefit
MSC: Interpretive
25 In response to a shortage caused by the imposition of a binding price ceiling on a market,
a price will no longer be the mechanism that rations scarce resources
b long lines of buyers may develop
c sellers could ration the good or service according to their own personal biases
d All of the above are correct
MSC: Interpretive
26 As rationing mechanisms, prices
a and long lines are efficient
b are efficient, but long lines are inefficient
c are inefficient, but long lines are efficient
d and long lines are inefficient
MSC: Interpretive
27 As a rationing mechanism, discrimination according to seller bias is
a efficient and fair
b efficient, but potentially unfair
c inefficient, but fair
d inefficient and potentially unfair
go to the buyer who values it most highly
d are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing
mechanism because it wastes buyers’ time
MSC: Interpretive
Trang 2529 In a free, competitive market, what is the rationing mechanism?
a seller bias
b buyer bias
c government law
d price
MSC: Interpretive
30 Which of the following would be the least likely result of a binding price ceiling imposed on the
market for rental cars?
a an accumulation of dirt in the interior of rental cars
b poor engine maintenance in rental cars
c free gasoline given to people as an incentive to a rent a car
d slow replacement of old rental cars with new ones
MSC: Applicative
31 When OPEC raised the price of crude oil in the 1970s, it caused the
a demand for gasoline to increase
b demand for gasoline to decrease
c supply of gasoline to increase
d supply of gasoline to decrease
MSC: Interpretive
32 When OPEC raised the price of crude oil in the 1970s, it caused the
a supply of gasoline to decrease
b quantity of gasoline demanded to decrease
c equilibrium price of gasoline to increase
d All of the above are correct
NAT: Analytic LOC: Supply and demand
TOP: OPEC | Supply | Quantity demanded | Prices MSC: Interpretive
33 When OPEC raised the price of crude oil in the 1970s, it caused the
a United States’ nonbinding price floor on gasoline to become binding
b United States’ binding price floor on gasoline to become nonbinding
c United States’ nonbinding price ceiling on gasoline to become binding
d United States’ binding price ceiling on gasoline to become nonbinding
MSC: Interpretive
34 In the United States, before OPEC increased the price of crude oil in 1973, there was
a no price ceiling on gasoline
b a nonbinding price ceiling on gasoline
c a binding price ceiling on gasoline
d a nonbinding price floor on gasoline
MSC: Interpretive
Trang 2635 Economists blame the long lines at gasoline stations in the U.S in the 1970s on
a U.S government regulations pertaining to the price of gasoline
b the Organization of Petroleum Exporting Countries (OPEC)
c major oil companies operating in the U.S
d consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full
NAT: Analytic LOC: Supply and demand
TOP: Economists | Price ceilings | Shortages MSC: Interpretive
36 Other than OPEC, the shortage of gasoline in the U.S in the 1970s could also be blamed on
a a sharp increase in the demand for gasoline that was brought on by the Vietnam War
b the government’s policy of maintaining a price ceiling on gasoline
c an indifference among U.S consumers toward conservation
d the lack of substitutes for crude oil
NAT: Analytic LOC: Supply and demand
TOP: OPEC | Price ceilings | Shortages MSC: Interpretive
37 In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that
a OPEC raised the price of crude oil in world markets
b U.S gasoline producers raised the price of gasoline
c the U.S government maintained a price ceiling on gasoline
d Americans typically commuted long distances
MSC: Interpretive
38 Rent control
a serves as an example of how a social problem can be alleviated or even solved by government policies
b serves as an example of a price ceiling
c is regarded by most economists as an efficient way of helping the poor
d is the most efficient way to allocate scarce housing resources
MSC: Definitional
39 The goal of rent control is to
a facilitate controlled economic experiments in urban areas
b help landlords by assuring them a low vacancy rate for their apartments
c help the poor by assuring them an adequate supply of apartments
d help the poor by making housing more affordable
MSC: Definitional
40 Economists generally believe that rent control is
a an efficient and fair way to help the poor
b inefficient, but the best available means of solving a serious social problem
c a highly inefficient way to help the poor raise their standard of living
d an efficient way to allocate housing, but not a good way to help the poor
MSC: Interpretive
Trang 2741 One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?
a He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people
b He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in
the city
c He fears that rent controls will cause a construction boom, which will make the city crowded and
more polluted
d He fears that rent control will eliminate the incentive to maintain buildings, leading to a
deterioration of the city
MSC: Interpretive
42 In the housing market, rent control causes
a quantity supplied and quantity demanded to fall
b quantity supplied to fall and quantity demanded to rise
c quantity supplied to rise and quantity demanded to fall
d quantity supplied and quantity demanded to rise
NAT: Analytic LOC: Supply and demand
TOP: Rent control | Quantity demanded | Quantity supplied MSC: Interpretive
43 Which of the following is not a short-run effect of rent control on the housing market?
a reduced rents
b a large shortage
c a small increase in quantity demanded
d a small decrease in quantity supplied
MSC: Interpretive
44 Over time, housing shortages caused by rent control
a increase, because the demand for and supply of housing are less elastic in the long run
b increase, because the demand for and supply of housing are more elastic in the long run
c decrease, because the demand for and supply of housing are less elastic in the long run
d decrease, because the demand for and supply of housing are more elastic in the long run
NAT: Analytic LOC: Supply and demand
TOP: Rent control | Long run | Elasticity MSC: Interpretive
45 Which of the following statements about the effects of rent control is correct?
a The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control
is a shortage of apartments
b The short-run effect of rent control is a relatively small shortage of apartments, and the long-run
effect of rent control is a larger shortage of apartments
c In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments
d The effects of rent control are very noticeable to the public in the short run because the primary
effects of rent control occur very quickly
MSC: Interpretive
Trang 2846 The long-run effects of rent controls are a good illustration of the principle that
a society faces a short-run tradeoff between unemployment and inflation
b the cost of something is what you give up to get it
c people respond to incentives
d government can sometimes improve on market outcomes
NAT: Analytic LOC: Supply and demand
47 Which of the following is not a rationing mechanism used by landlords in cities with rent control?
a waiting lists
b race
c price
d bribes
MSC: Interpretive
48 Under rent control, bribery is a mechanism to
a bring the total price of an apartment (including the bribe) closer to the equilibrium price
b allocate housing to the poorest individuals in the market
c force the total price of an apartment (including the bribe) to be less than the market price
d allocate housing to the most deserving tenants
MSC: Interpretive
49 Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
a with rent control, the government guarantees landlords a minimum level of profit
b they become resigned to the fact that many of their apartments are going to be vacant at any given time
c with shortages and waiting lists, they have no incentive to maintain and improve their property
d with rent control, it becomes the government's responsibility to maintain rental housing
MSC: Interpretive
50 Under rent control, tenants can expect
a lower rent and higher quality housing
b lower rent and lower quality housing
c higher rent and a shortage of rental housing
d higher rent and a surplus of rental housing
MSC: Interpretive
51 Which of the following is not a result of rent control?
a fewer new apartments offered for rent
b less maintenance provided by landlords
c bribery
d higher quality housing
MSC: Interpretive
Trang 2952 A legal minimum on the price at which a good can be sold is called a price
a subsidy
b floor
c support
d ceiling
MSC: Definitional
53 A price floor is
a a legal minimum on the price at which a good can be sold
b often imposed when sellers of a good are successful in their attempts to convince the government
that the market outcome is unfair without a price floor
c a source of inefficiency in a market
d All of the above are correct
b Buyers and sellers of corn have agreed that the price floor is good for both of them and have
therefore pressured policy makers into imposing the price floor
c Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor
d Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor
MSC: Interpretive
55 If a price floor is not binding, then
a the equilibrium price is above the price floor
b the equilibrium price is below the price floor
c it has no legal enforcement mechanism
d More than one of the above is correct
MSC: Interpretive
56 If a price floor is not binding, then
a there will be a surplus in the market
b there will be a shortage in the market
c there will be no effect on the market price or quantity sold
d the market will be less efficient than it would be without the price floor
MSC: Interpretive
Trang 3057 If a nonbinding price floor is imposed on a market, then
a the quantity sold in the market will decrease
b the quantity sold in the market will stay the same
c the price in the market will increase
d the price in the market will decrease
MSC: Interpretive
58 A price floor will be binding only if it is set
a equal to the equilibrium price
b above the equilibrium price
c below the equilibrium price
d either above or below the equilibrium price
MSC: Interpretive
59 A price floor is binding when it is set
a above the equilibrium price, causing a shortage
b above the equilibrium price, causing a surplus
c below the equilibrium price, causing a shortage
d below the equilibrium price, causing a surplus
MSC: Interpretive
60 To say that a price floor is binding is to say that the price floor
a results in a shortage
b is set below the equilibrium price
c causes quantity supplied to exceed quantity demanded
d All of the above are correct
MSC: Interpretive
61 A surplus results when
a a nonbinding price floor is imposed on a market
b a nonbinding price floor is removed from a market
c a binding price floor is imposed on a market
d a binding price floor is removed from a market
MSC: Interpretive
62 The imposition of a binding price floor on a market causes quantity demanded to be
a greater than quantity supplied
b less than quantity supplied
c equal to quantity supplied
d Both (a) and (b) are possible
MSC: Interpretive
Trang 3163 If a price floor is a binding constraint on a market, then
a the equilibrium price must be above the price floor
b the quantity demanded must exceed the quantity supplied
c sellers cannot sell all they want to sell at the price floor
d buyers cannot buy all they want to buy at the price floor
MSC: Interpretive
64 Which of the following observations would be consistent with the imposition of a binding price floor on a market?
a A smaller quantity of the good is bought and sold after the price floor becomes effective
b A larger quantity of the good is demanded after the price floor becomes effective
c A smaller quantity of the good is supplied after the price floor becomes effective
d All of the above are correct
MSC: Interpretive
65 If a binding price floor is imposed on the video game market, then
a the demand for video games will decrease
b the supply of video games will increase
c a surplus of video games will develop
d All of the above are correct
MSC: Interpretive
66 If a binding price floor is imposed on the video game market, then
a the quantity of video games demanded will decrease
b the quantity of video games supplied will increase
c a surplus of video games will develop
d All of the above are correct
MSC: Interpretive
67 Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price floor of $250 per physical As a result of the price floor,
a the demand curve for physicals shifts to the left
b the supply curve for physicals shifts to the right
c the quantity demanded of physicals decreases and the quantity of physicals doctors want to give
increases
d the number of physicals performed stays the same
MSC: Interpretive
68 Suppose the government has imposed a price floor on televisions Which of the following events could transform the price floor from one that is not binding into one that is binding?
a Firms expect the price of televisions to rise in the future
b The number of firms selling televisions decreases
c Consumers' income decreases, and televisions are a normal good
d The number of consumers buying televisions increases
MSC: Analytical
Trang 3269 Suppose the government has imposed a price floor on cellular phones Which of the following events could transform the price floor from one that is binding to one that is not binding?
a Cellular phones become less popular
b Traditional land line phones become more expensive
c The components used to produce cellular phones become less expensive
d Firms expect the price of cellular phones to fall in the future
MSC: Analytical
70 If the government removes a binding price floor from a market, then the price paid by buyers will
a increase and the quantity sold in the market will increase
b increase and the quantity sold in the market will decrease
c decrease and the quantity sold in the market will increase
d decrease and the quantity sold in the market will decrease
MSC: Analytical
71 If the government removes a binding price floor from a market, then the price received by sellers will
a decrease and the quantity sold in the market will decrease
b decrease and the quantity sold in the market will increase
c increase and the quantity sold in the market will decrease
d increase and the quantity sold in the market will increase
MSC: Analytical
72 When a binding price floor is imposed on a market,
a price no longer serves as a rationing device
b the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor
c only some sellers benefit
d All of the above are correct
MSC: Interpretive
73 When a binding price floor is imposed on a market to benefit sellers,
a every seller in the market benefits
b every buyer in the market benefits, too
c every seller who wants to sell the good will be able to do so, but only if they appeal to the personal biases of the buyers
d some sellers will not be able to sell any amount of the good
MSC: Interpretive
74 When a binding price floor is imposed on a market to benefit sellers,
a no sellers actually do benefit
b some sellers benefit, but no sellers are harmed
c some sellers benefit and some sellers are harmed
d all sellers benefit
MSC: Interpretive
Trang 3375 A binding price floor will reduce a firm's total revenue
a always
b when demand is elastic
c when demand is inelastic
d never
NAT: Analytic LOC: Elasticity
TOP: Price floors | Price elasticity of demand | Total revenue MSC: Analytical
76 An example of a price floor is
a the regulation of gasoline prices in the U.S in the 1970s
b rent control
c the minimum wage
d any restriction on price that leads to a shortage
MSC: Definitional
78 Which of the following is correct?
a Rent control and the minimum wage are both examples of price ceilings
b Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor
c Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling
d Rent control and the minimum wage are both examples of price floors
NAT: Analytic LOC: Supply and demand
TOP: Rent control | Minimum wage MSC: Interpretive
79 Minimum-wage laws dictate the
a average price employers must pay for labor
b highest price employers may pay for labor
c lowest price employers may pay for labor
d the highest and lowest prices employers may pay for labor
MSC: Definitional
Trang 3481 The minimum wage was instituted to ensure workers
a a middle-class standard of living
b employment
c a minimally adequate standard of living
d unemployment compensation
MSC: Definitional
84 Which of the following is not correct?
a Some states in the U.S mandate minimum wages above the federal level
b Most European nations have minimum-wage laws
c The U.S minimum wage is significantly higher than the minimum wages in France and the United Kingdom
d The U.S Congress first instituted a minimum wage with the Fair Labor Standards Act
MSC: Interpretive
85 Which of the following is correct?
a Workers determine the supply of labor, and firms determine the demand for labor
b Workers determine the demand for labor, and firms determine the supply of labor
c The labor market is a single market for all different types of workers
d The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor
NAT: Analytic LOC: Labor markets
TOP: Labor demand | Labor supply MSC: Interpretive
86 If the minimum wage exceeds the equilibrium wage, then
a the quantity demanded of labor will exceed the quantity supplied
b the quantity supplied of labor will exceed the quantity demanded
c the minimum wage will not be binding
d there will be no unemployment
MSC: Interpretive
Trang 3587 A minimum wage that is set above a market's equilibrium wage will result in
a an excess demand for labor, that is, unemployment
b an excess demand for labor, that is, a shortage of workers
c an excess supply of labor, that is, unemployment
d an excess supply of labor, that is, a shortage of workers
NAT: Analytic LOC: Labor markets
TOP: Minimum wage | Unemployment MSC: Interpretive
88 A minimum wage that is set below a market's equilibrium wage will result in
a an excess demand for labor, that is, unemployment
b an excess demand for labor, that is, a shortage of workers
c an excess supply of labor, that is, unemployment
d None of the above is correct
MSC: Interpretive
89 A binding minimum wage
a alters both the quantity demanded and quantity supplied of labor
b affects only the quantity of labor demanded; it does not affect the quantity of labor supplied
c has no effect on the quantity of labor demanded or the quantity of labor supplied
d causes only temporary unemployment, since the market will adjust and eliminate any temporary
surplus of workers
MSC: Interpretive
90 The minimum wage, if it is binding, raises the incomes of
a no workers
b only those workers who cannot find jobs
c only those workers who have jobs
d all workers
MSC: Interpretive
91 The minimum wage, if it is binding, lowers the incomes of
a no workers
b only those workers become unemployed
c only those workers who have jobs
d all workers
MSC: Interpretive
92 Which of the following is not correct?
a The economy contains many labor markets for different types of workers
b The impact of the minimum wage depends on the skill and experience of the worker
c The minimum wage is binding for workers with high skills and much experience
d The minimum wage is not binding when the equilibrium wage is above the minimum wage
MSC: Interpretive
Trang 3693 The minimum wage has its greatest impact on the market for
a female labor
b older labor
c black labor
d teenage labor
MSC: Definitional
94 The minimum wage does not apply to
a jobs for teenagers
b jobs for members of minority groups
c unpaid internships
d jobs that include on-the-job training
MSC: Definitional
96 Which of the following is correct?
a Studies of the effects of the minimum wage typically find that a 10 percent increase in the
minimum wage raises the average wage of teenagers by 10 percent
b The drop in teenage employment caused by a 10 percent increase in the minimum wage is not
significant
c The minimum wage is more often binding for teenagers than for other members of the labor force
d Enforcement of minimum-wage laws is perfect
MSC: Interpretive
97 Which of the following is not correct?
a In a 2006 survey of Ph.D economists, 47 percent favored eliminating the minimum wage
b In a 2006 survey of Ph.D economists, 14 percent would maintain the minimum wage at its current level
c In a 2006 survey of Ph.D economists, 38 percent would increase the minimum wage
d In a 2006 survey of Ph.D economists, 10 percent would decrease the minimum wage
MSC: Definitional
98 Advocates of the minimum wage
a deny that the minimum wage produces any adverse effects
b emphasize the benefits to teenagers of increases in the minimum wage
c emphasize the low annual incomes of those who work for the minimum wage
d All of the above are correct
MSC: Interpretive
Trang 3799 Opponents of the minimum wage point out that the minimum wage
a encourages teenagers to drop out of school
b prevents some workers from getting needed on-the-job training
c contributes to the problem of unemployment
d All of the above are correct
MSC: Interpretive
100 The proportion of minimum-wage earners who are in families with incomes below the poverty line is
a less than one-third
b between one-third and one-half
c between one-half and two-thirds
d greater than two-thirds
MSC: Definitional
101 There are several criticisms of the minimum wage Which of the following is not one of those
criticisms?
a The minimum wage often hurts those people who it is intended to help
b The minimum wage results in an excess supply of low-skilled labor
c The minimum wage prevents some unskilled workers from getting needed on-the-job training
d The minimum wage fails to raise the wage of any employed person
MSC: Interpretive
102 An outcome that can result from either a price ceiling or a price floor is
a a surplus in the market
b a shortage in the market
c a nonbinding price control
d long lines of frustrated buyers
MSC: Interpretive
104 Price ceilings and price floors that are binding
a are desirable because they make markets more efficient and more fair
b cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price
c can have the effect of restoring a market to equilibrium
d are imposed because they can make the poor in the economy better off without causing adverse
effects
MSC: Interpretive
Trang 38105 When government imposes a price ceiling or a price floor on a market,
a price no longer serves as a rationing device
b efficiency in the market is enhanced
c shortages and surpluses are eliminated
d buyers and sellers both become better off
MSC: Interpretive
106 You have responsibility for economic policy in the country of Freedonia Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia Harpo, who is one of your advisors, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges Chico, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop Zeppo, a third advisor, says that the best way to avoid a shortage of oranges
is to take no action at all Which of your three advisors is most likely to have studied economics?
MSC: Applicative
Trang 39109 Refer to Table 6-1 Suppose the government imposes a price ceiling of $1 on this market What
will be the size of the shortage in this market?
a 0 units
b 2 units
c 8 units
d 10 units
MSC: Applicative
110 Refer to Table 6-1 Suppose the government imposes a price ceiling of $5 on this market What
will be the size of the shortage in this market?
a 0 units
b 2 units
c 8 units
d 10 units
MSC: Applicative
111 Refer to Table 6-1 Suppose the government imposes a price floor of $1 on this market What will
be the size of the surplus in this market?
a 0 units
b 2 units
c 8 units
d 10 units
MSC: Applicative
112 Refer to Table 6-1 Suppose the government imposes a price floor of $5 on this market What will
be the size of the surplus in this market?
a 0 units
b 2 units
c 8 units
d 10 units
MSC: Applicative
Trang 40Table 6-2
Price Quantity
Demanded
QuantitySupplied
113 Refer to Table 6-2 Which of the following statements is correct?
a A price ceiling set at $5 will be binding and will result in a shortage of 50 units
b A price ceiling set at $5 will be binding and will result in a shortage of 75 units
c A price ceiling set at $5 will be binding and will result in a shortage of 125 units
d A price ceiling set at $5 will not be binding
MSC: Applicative
114 Refer to Table 6-2 Which of the following statements is correct?
a A price ceiling set at $15 will be binding and will result in a shortage of 50 units
b A price ceiling set at $15 will be binding and will result in a shortage of 100 units
c A price ceiling set at $15 will be binding and will result in a shortage of 125 units
d A price ceiling set at $15 will not be binding
MSC: Applicative
115 Refer to Table 6-2 Which of the following statements is correct?
a A price floor set at $20 will be binding and will result in a surplus of 50 units
b A price floor set at $20 will be binding and will result in a surplus of 100 units
c A price floor set at $20 will be binding and will result in a surplus of 250 units
d A price floor set at $20 will not be binding
MSC: Applicative
116 Refer to Table 6-2 Which of the following statements is correct?
a A price floor set at $5 will be binding and will result in a surplus of 50 units
b A price floor set at $5 will be binding and will result in a surplus of 75 units
c A price floor set at $5 will be binding and will result in a surplus of 125 units
d A price floor set at $5 will not be binding
MSC: Applicative