Liberty University ECON 213 quiz 4 complete solutions correct answers A+ work

Liberty University ECON 213 quiz 4 complete solutions correct answers A+ work

More than 6 different versions

Question 1 If a store sells a good at the market price, even though the government authorities have set the minimum price that can be charged, the store is selling the good in a(n):

Question 2 Which of the following is an accurate statement about the consequence of a binding price floor?

Question 3 Refer to the accompanying figure, which shows both short­run and long­run demand and supply curves. If there is a $4 binding price ceiling imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run?

Question 4 The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families. The law that sets food prices low enough to meet these requirements would be an example of a:

Question 5 Apartment rent control in New York City is an example of:

Question 6 Use the following table to answer the questions that follow.

At what price level does the labor market experience its largest shortage?

Question 7 Why do shortages develop under a binding price ceiling?

Question 8 Do all sellers benefit from a binding price floor?

Question 9 How do consumers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?

Question 10 Use the following figure to answer the questions that follow

The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P3, predict the resulting surplus or shortage.

Question 11 Refer to the accompanying figure to answer the questions that follow. If there is a $60 price ceiling imposed on a textbook, what will be the disequilibrium amount?

Question 12 Suppose you live in a community with no price controls. What do you expect to happen if your town borders a community where there is a nonbinding price floor on most products?

Question 13 What will I do differently as a seller in the black market in the long run?

Question 14 A binding price ceiling will have the following consequences:

Question 15 What will I do differently as a buyer in the black market in the long run?

Question 16 A binding price floor creates a surplus, which means:

Question 17 You are the president of the United States. In an attempt to make prescription drug prices cheaper, you have imposed a binding price ceiling on drugs. What would you expect your critics to say?

Question 18 Let’s say that you have a friend who was caught illegally buying a good on the black market. When the judge asks you to describe your friend’s motivation as a buyer, which of the following would most likely be your reply?

Question 19 What will happen in a market where a nonbinding price floor is removed?

Question 20 Refer to the accompanying figure. At what price would there be the least pressure to form a black market?

Question 1 A binding price floor creates a surplus, which means:

Question 2 The minimum wage law is an example of a:

Question 3 Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market experience its largest shortage?

Question 4 Let’s say that you have a friend who was caught illegally selling a good on the black market. When the judge asks you to describe your friend’s motivation as a seller, which of the following would most likely be your reply?

Question 5 Use the following table to answer the questions that follow.

If a minimum wage is established at $7.50, determine the amount of disequilibrium in the labor market.

Question 6 Refer to the accompanying figure to answer the questions that follow.

The market is currently at market equilibrium. If a binding price ceiling of P1is imposed, by how much would the quantity supplied change?

Question 7 What is the long­run consequence of a price ceiling law?

Question 8 What is the incentive to create a black market when a binding price ceiling exists?

Question 9 ____________ is a real­life example of a price floor.

Question 10 Use the following figure to answer the questions that follow.

If the government imposes a price floor on wheat at $5, predict the amount of disequilibrium.

Question 11 Who potentially benefits from a price floor?

Question 12 Why are binding price ceiling laws passed?

Question 13 What will happen in a market where a binding price floor is removed?

Question 14 Which of the following would be true in a city with rent­controlled apartments?

Question 15 Use the following table to answer the questions that follow.

What would be the equilibrium price in the market for corn?

Question 16 Why does a shortage that occurs under a binding price ceiling decrease over time?

Question 17 What is the incentive to create a black market when a binding price floor exists?

Question 18 Which of the following is a correct statement about a minimum wage law?

Question 19 Use the following table to answer the questions that follow.

At what price level does the labor market experience its largest surplus?

Question 20 The consequence of a price floor set below the equilibrium price is:

Question 1

What will happen in a market where a binding price floor is removed?

Question 2

If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the price over time?

Question 3

Imagine you find yourself in a heat wave and your air conditioner has broken. Unable to find a new one at the store because of a price gouging law, you purchase an air conditioner on the black market. What role did the price gouging law have?

Question 4

Use the following information to answer the questions that follow.

Market for used cars:

Demand: Qd = 154,000 – 86 P

Supply: Qs = –100 + 14 P

What would be the quantity supplied if a price floor is set at $100?

Question 5

Why does a surplus exist under a binding price floor?

Question 6

A binding price floor creates a surplus, which means:

Question 7

Refer to the accompanying figure to answer the questions that follow.

If there is a $180 price ceiling imposed on a textbook, what will be the disequilibrium amount?

Question 8

Mortimer loves sushi. He loves sushi so much that he asks his congressional representative to work for passage of a binding price ceiling law. Who would be affected by this law and how?

Question 9

Why are binding price ceiling laws passed?

Question 10

Which of the following would be true in a city with rentcontrolled apartments?

Question 11

If you were a politician, why would you find it difficult to remove a binding price ceiling?

Question 12

Use the following information to answer the questions that follow.

Market for used cars:

Demand: Qd = 154,000 – 86 P

Supply: Qs = –100 + 14 P

What would be the equilibrium quantity for used cars?

Question 13

What will happen in a market where a binding price ceiling is removed?

Question 14

As a politician, you would be more inclined to propose an increase in the minimum wage when you believe that the new minimum wage would:

Question 15

Use the following table to answer the questions that follow.

At what price level does the labor market experience its largest shortage?

Question 16

Let’s say that you have a friend who was caught illegally selling a good on the black market. When the judge asks you to describe your friend’s motivation as a seller, which of the following would most likely be your reply?

Question 17

As a seller of a product subject to a binding price floor, you would be better off in which of the following situations?

Question 18

You would expect there to be many customers for a black market good when the opportunity cost of finding the good under a:

Question 19

Refer to the accompanying figure. At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium?

Question 20

Use the following table to answer the questions that follow.

What is the surplus when the price floor is $0.75 in the market for public transportation?

As the time frame shifts from the short run to the long run, what happens to producers who are subject to a binding price floor

What is the incentive to create a black market when a binding price ceiling exists

What is the amount of the shortage or surplus in the market for public transportation when the price ceiling is $1.75

You are the president of the United States. In an attempt to make prescription drug prices cheaper, you have imposed a binding price ceiling on drugs. What would you expect your critics to say

Use the following information to answer the questions that follow. 
Market for a new hardcover book:
Demand: Qd = 325 – 8 P
Supply: Qs =  –60 + 3 P
What would be the quantity supplied if a price floor is set at $50

If a price floor is imposed at $15 per unit when the equilibrium market price is $12, there will be

Use the following table to answer the questions that follow.
At what price level does the labor market experience its largest shortage

Use the following table to answer the questions that follow.
What is the equilibrium price in the market for public transportation

Refer to the accompanying table to answer the questions that follow.
At what price level does the apartment market experience its largest shortage

Suppose you live in a community with no price controls. What do you expect will happen if your town borders a community where there is a binding price ceiling on most products

Many states have laws that limit the maximum amount of interest that a lender can charge a borrower. Such a law is an example of a(n)

Use the following figure to answer the questions that follow.
The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P1, predict the resulting surplus or shortage

If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season, what will be the consequence

Let’s say that you have a friend who was caught illegally selling a good on the black market. When the judge asks you to describe your friend’s motivation as a seller, which of the following would most likely be your reply

What will happen in a market where a binding price floor is removed

Use the following table to answer the questions that follow.
What is the surplus when the price floor is $0.75 in the market for public transportation

Use the following information to answer the questions that follow. Market for a new hardcover book:
Demand: Qd = 325  – 8 P
Supply: Qs =  –60 + 3 P
What would be the quantity demanded if a price ceiling is set at $20

The town of Fairness has a law that says that wages should be high enough to ensure that all people can afford to buy enough food to feed their families. The law that sets food prices low enough to meet these requirements would be an example of a

Use the following information to answer the questions that follow.
Market for used cars:
Demand: Qd = 154,000 – 86 P
Supply: Qs =  –100 + 14 P
What would be the equilibrium price for used cars

Refer to the accompanying figure. If the government has a budget of $300,000 to purchase surplus shampoo, what is the maximum possible floor price that could be imposed

Question 1 Refer to the accompanying figure. If the government has a budget of $300,000 to purchase surplus shampoo, what is the maximum possible floor price that could be imposed?

Question 2 The minimum wage law is an example of a:

Question 3 Which of the following is an accurate statement about the consequence of a binding price ceiling?

Question 4 Use the following information to answer the questions that follow. Market for flat­screen TVs: Demand: Qd = 2,600 – 5 P Supply: Qs = –1,000 + 10 P What would be the equilibrium quantity for flatscreen TVs?

Question 5 Use the following information to answer the questions that follow. Market for used cars: Demand: Qd = 154,000 – 86 P Supply: Qs = –100 + 14 P What would be the equilibrium price for used cars?

Question 6 A binding price ceiling will have the following consequences:

Question 7 Use the following table to answer the questions that follow. What would be the equilibrium quantity in the market for corn?

Question 8 Refer to the accompanying table to answer the questions that follow. At what price level does the apartment market experience its largest surplus?

Question 9 A nonbinding price floor has the following consequences:

Question 10 Use the following information to answer the questions that follow. Market for used cars: Demand: Qd = 154,000 – 86 P Supply: Qs = –100 + 14 P What would be the quantity demanded if a price ceiling is set at $2,000?

Question 11 What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

Question 12 Use the following figure to answer the questions that follow. If the government imposes a price floor on wheat at $5 and agrees to purchase any surpluses, how much will the government be forced to spend?

Question 14 A real­life example of a binding price ceiling is:

Question 15 What is the long­run consequence of a price ceiling law?

Question 16 As a politician, you would be more inclined to propose an increase in the minimum wage when you believe that the new minimum wage would:

Question 17 Refer to the accompanying figure to answer the questions that follow. The market is currently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity supplied change?

Question 18 Use the following table to answer the questions that follow. What would be the equilibrium price in the market for corn?

Question 19 Use the following table to answer the questions that follow. At what price level does the labor market reach equilibrium?

Question 20 In some countries, a binding price ceiling is placed on prescription medicines. What would you expect the prescription medicine market to be like in these countries?

Question 1 Why does a shortage that occurs under a binding price ceiling decrease over time?

Question 2 ____________ is a real­life example of a price floor.

Question 3 You are the president of the United States. In an attempt to make gasoline prices cheaper, you have imposed a binding price ceiling on gas. What would you expect your critics to say?

Question 4 Use the following information to answer the questions that follow. Market for used cars: Demand: Qd = 154,000 – 86 P Supply: Qs = –100 + 14 P What would be the quantity demanded if a price ceiling is set at $2,000?

Question 5 What is the incentive to create a black market when a binding price ceiling exists?

Question 6 Suppose you live in a community with no price controls. What do you expect to happen if your town borders a community where there is a binding price floor on most products?

Question 7 Use the following information to answer the questions that follow. Market for used cars: Demand: Qd = 154,000 – 86 P Supply: Qs = –100 + 14 P What would be the quantity demanded if a price ceiling is set at $1,000?

Question 8 A real­life example of a binding price ceiling is:

Question 9 Apartment rent control in New York City is an example of:

Question 10 What will happen in a market where a binding price floor is removed?

Question 11 Use the following information to answer the questions that follow. Market for flat­screen TVs: Demand: Qd = 2,600 – 5 P Supply: Qs = –1,000 + 10 P What would be the quantity demanded if a price ceiling is set at $150?

Question 12 Refer to the accompanying figure. At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium?

Question 13 What is a black market?

Question 14 You would expect there to be many customers for a black market good when the opportunity cost of finding the good under a:

Question 15 Tina, an economics student, was just named Miss Florida, based in part on her answer to the question of why price gouging laws should be relaxed in that state. Tina won because she gave which of the following answers?

Question 16 Use the following table to answer the questions that follow. What is the equilibrium quantity in the market for public transportation?

Question 17 Use the following table to answer the questions that follow. What will be the amount of government expenditure required if a price floor for corn is set at $4.50 and the government agrees to purchase the amount of disequilibrium?

Question 18 What is the amount of the shortage or surplus in the market for public transportation when the price ceiling is $1.75?

Question 19 As the time frame shifts from the short run to the long run, what happens to producers who are subject to a binding price floor?

Question 20 Refer to the accompanying table to answer the questions that follow. If rent control is established at $1,550, what would be the amount of disequilibrium in the apartment market?

Question 1 Refer to the accompanying figure. At what price would there be the least pressure to form a black market?

Question 2 Do all buyers benefit from a binding price ceiling?

Question 3 Refer to the accompanying table to answer the questions that follow. At what price level does the apartment market reach equilibrium?

Question 4 Why are binding price floor laws passed?

Question 5 Why is raising the minimum wage generally ineffective?

Question 6 Refer to the accompanying figure to answer the questions that follow. The market is currently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity demanded change?

Question 7 Refer to the accompanying figure, which shows both short-­run and long-­run demand and supply curves. If there is a $4 binding price ceiling imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run?

Question 8 Use the following information to answer the questions that follow. Market for a new hardcover book: Demand: Qd = 325 – 8 P Supply: Qs = –60 + 3 P What would be the equilibrium price for hardcover books?

Question 9 What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

Question 10 Use the following figure to answer the questions that follow. The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P1, predict the resulting surplus or shortage.

Question 11 What is the long­run consequence of a price ceiling law?

Question 12 Let’s say that you have a friend who was caught illegally buying a good on the black market. When the judge asks you to describe your friend’s motivation as a buyer, which of the following would most likely be your reply?

Question 13 Refer to the accompanying figure. At the price of the binding price floor, by how much would the quantity supplied change from the market equilibrium?

Question 14 A nonbinding price floor has the following consequences:

Question 15 How do producers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?

Question 16 Let’s say that you have a friend who was caught illegally selling a good on the black market. When the judge asks you to describe your friend’s motivation as a seller, which of the following would most likely be your reply?

Question 17 If a good is subject to a binding price ceiling and you purchase it on the black market, what do you expect to happen to the availability of the good over time?

Question 18 Refer to the accompanying figure to answer the questions that follow. The market is currently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity supplied change?

Question 19 You are the president of the United States. In an attempt to make prescription drug prices cheaper, you have imposed a binding price ceiling on drugs. What would you expect your critics to say?

Question 20 Which of the following is true, holding all other things constant, when comparing regions that impose a higher minimum wage to regions that impose a lower minimum wage?

Question 1

Which of the following concepts do economists focus their study on when explaining how humans behave?

Question 2

If you don’t like changing the oil in your car and pay your father to do it for you, you have provided him with a(n):

Question 3

What is the opportunity cost of taking this exam?

Question 4

The opportunity cost of working rather than going to school is:

Question 5

The term ________ means “additional.”

Question 6

Saudi Arabia has a comparative advantage in producing oil because it:

Question 7

Ceteris paribus means:

Question 8

A graph that shows the maximum attainable combinations of two goods when society efficiently uses its productive resources is called:

Question 9

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor, unemployment is illustrated by:

Question 10

Consider the production possibilities frontier (PPF) shown in the figure below to answer the questions that follow.

The set of efficient points is best described as:

Question 11

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow.

What is Gibbs’s opportunity cost of solving a crime?

Question 12

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the questions that follow.

What is Jim’s opportunity cost of making 1 pizza?

Question 13

Specialization and trade allow individuals to:

Question 14

Refer to the following table to answer the questions that follow.

Suppose that Alicia Keys and Jay-Z could each make either New York–style pizza or Philly cheesesteaks. Given an eight-hour workday, which of the following would permit them to consume outside their respective production possibilities frontiers (PPFs)?

Question 15

Suppose that, on a particular Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with blanks where you can calculate the opportunity cost. At what terms of trade (relative price ratio) could they specialize and trade with one another so that both have more trees planted and mulch spread than they could accomplish on their own?

Question 16

Something is a normal good if the demand for the good:

Question 17

The demand curve for a good will shift to the right if, holding all else constant,

Question 18

Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):

Question 19

If the price of Gatorade increases, the

Question 20

Which of the quantity (Q) and price (P) combinations in the accompanying figure represents the market at competitive equilibrium?

Question 21

According to the supply and demand model, when the cotton gin was invented and if all else was held constant, we would expect the equilibrium price of cotton to _________ and the equilibrium quantity of cotton to _________.

Question 22

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

Question 23

Refer to the accompanying table. When the price drops from $5 to $3, price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is:

Question 24

While there are many pizza places in Curtisville, Pappy’s Pizza is known for its distinctive deep-dish pizza with an almost pie-like crust, whereas Momma’s Pizza Pizzazz is comparable to many other restaurants. Pappy’s is likely to find that it can ________ prices to increase total revenue, and Mommas must ________ prices to increase total revenue.

Question 25

A binding price ceiling will have the following consequences:

Question 26

Refer to the accompanying figure to answer the questions that follow.

The market is currently at market equilibrium. If a binding price ceiling of P1 is imposed, by how much would the quantity demanded change?

Question 27

Refer to the accompanying figure to answer the questions that follow.

If there is a $180 price ceiling imposed on a textbook, what will be the disequilibrium amount?

Question 28

Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market reach equilibrium?

Question 29

Use the following information to answer the questions that follow.

Market for flat-screen TVs:

Demand: Qd = 2,600  – 5 P

Supply: Qs =  –1,000 + 10 P

What would be the quantity demanded if a price floor is set at $300?

Question 30

Use the following table to answer the questions that follow.

At what price level does the labor market experience its largest shortage?

Question 1

What is a black market?

Select one:

a. It is an illegal market that emerges when binding and nonbinding price controls are in place.

b. It is an illegal market that emerges when only binding price ceilings and binding price floors are in place.

c. It is an illegal market that emerges when no price controls are present.

d. It is an illegal market that emerges when binding price floors are in place.

e. It is an illegal market that emerges when binding price ceilings are in place.

Question 2

Why are binding price ceiling laws passed?

Select one:

a. They encourage producers to sell higher-quality products.

b. They permit customers to obtain higher-quality products.

c. They encourage sellers to produce more of a good.

d. They make goods more expensive (and profitable) for firms.

e. They make a good less expensive for those customers who are able to purchase the good in the legal market.

Question 3

Mortimer loves sushi. He loves sushi so much that he asks his congressional representative to work for passage of a binding price ceiling law. Who would be affected by this law and how?

Select one:

a. Consumers would benefit from such a law because prices would be lower and all would be able to purchase sushi cheaply.

b. Sellers would benefit from such a law because they would receive a higher price for their product.

c. Consumers would benefit from such a law because the sushi would be made of higher quality fish, and each serving would be larger than it had been with no binding price ceiling in place.

d. Some consumers would benefit from such a law because prices for sushi would be lower for those able to buy it in the legal market.

e. Sellers would benefit from such a law because they would be able to sell higher-quality sushi and thus capture a larger share of the market.

Question 4

Use the following information to answer the questions that follow. Market for flat-screen TVs:

Demand: Qd = 2,600 – 5 P

Supply: Qs = –1,000 + 10 P

What would be the quantity demanded if a price ceiling is set at $150?

Select one:

a. 240

b. 260

c. 1,350

d. 500

e. 1,850

Question 5

Use the following information to answer the questions that follow. Market for used cars:

Demand: Qd = 154,000 – 86 P

Supply: Qs = –100 + 14 P

What would be the quantity demanded if a price ceiling is set at $1,000?

Select one:

a. 500

b. 68,000

c. 13,900

d. 54,100

e. 21,474

Question 6

Use the following information to answer the questions that follow. Market for a new hardcover book:

Demand: Qd = 435 – 8 P

Supply: Qs = –60 + 3 P

What would be the quantity demanded if a price ceiling is set at $50?

Select one:

a. 35

b. 75

c. 265

d. 90

e. 165

Question 7

Use the following table to answer the questions that follow.

If the price ceiling for corn is $2.50, what amount and type of disequilibrium would be present in the market for corn?

Select one:

a. There would be a shortage of 186,000.

b. There would be a shortage of 61,000.

c. There would be a surplus of 61,000.

d. There would be a shortage of 125,000.

e. There would be neither a shortage nor a surplus.

Question 8

What is the amount of the shortage or surplus in the market for public transportation when the price ceiling is $1.75?

Select one:

a. 0 (zero)

b. 100,000

c. 40,000

d. 75,000

e. 86,000

Question 9

Suppose you live in a community with no price controls. What do you expect will happen if your town borders a community where there is a nonbinding price ceiling on most products?

Select one:

a. The black market in the community with a binding price ceiling will not be strong because consumers will simply purchase the product in the community that has no price ceiling.

b. The price and the quantity sold in the community without a nonbinding price ceiling will be the same as the price and quantity in the community with a nonbinding price ceiling.

c. There will be more shortages in the community with a binding price ceiling.

d. Legal market prices will rise in the community with a binding price ceiling.

e. Legal market prices will fall in the community with a binding price ceiling.

Question 10

What would you expect the consequences to size and quality would be for a product sold under a binding price ceiling?

Select one:

a. The quality of the product will decrease but the size of the product will increase.

b. Both the quality and the size of the product will decrease.

c. Neither the quality nor the size of the product will be affected.

d. Both the quality and the size of the product will increase.

e. The quality of the product will increase but the size of the product will decrease.

Question 11

Let’s say that you have a friend who was caught illegally buying a good on the black market. When the judge asks you to describe your friend’s motivation as a buyer, which of the following would most likely be your reply?

Select one:

a. My friend bought the good on the black market because a binding price floor had created a shortage in the legal market and my friend really needed the good.

b. My friend bought the good on the black market because a binding price floor made the good too expensive to purchase on the legal market and it was cheaper on the black market.

c. My friend bought the good on the black market because a nonbinding price floor made the good too expensive to purchase on the legal market and it was cheaper on the black market.

d. My friend bought the good on the black market because a price ceiling caused the price to be lower on the black market.

e. My friend bought the good on the black market because a nonbinding price floor had created a shortage on the legal market and my friend really needed the good.

Question 12

Refer to the accompanying figure. At what price would there be the least pressure to form a black market? Select one:

a. $20

b. $8

c. $13

d. $5

e. $15

Question 13

Refer to the accompanying table to answer the questions that follow.

At what price level does the apartment market reach equilibrium?

Select one:

a. $1,700

b. $1,500

c. $1,650

d. $1,550

e. $1,600

Question 14

The minimum wage law is an example of a:

Select one:

a. law that requires quantity demanded to equal quantity supplied.

b. price ceiling.

c. law that sets the minimum number of hours that an employee must work for wages during the week.

d. price floor.

e. law that allows individual employers and employees to make free decisions.

Question 15

Do all sellers benefit from a binding price floor?

Select one:

a. No. A binding price floor doesn’t benefit any sellers because sellers will be unwilling to sell any of their products.

b. No. A binding price floor benefits only some sellers because not all are able to sell as much as they would like in the legal market.

c. No. A binding price floor doesn’t benefit any buyers because buyers are unwilling to purchase any of the products at a price lower than the equilibrium.

d. No. A binding price floor benefits only some sellers because the price is initially higher but then eventually decreases to the equilibrium price.

e. Yes. A binding price floor benefits all sellers because it allows all sellers to sell as much as they produce on the legal market.

Question 16

If a price floor is imposed at $15 per unit when the equilibrium market price is $12, there will be:

Select one:

a. a downward pressure on prices.

b. a surplus.

c. mass hysteria

d. no surplus or shortage.

e. a shortage.

Question 17

What will happen in a market where a nonbinding price floor is removed?

Select one:

a. There will be upward pressure on the prices.

b. There will be increased pressure to buy and sell the good on the black market.

c. There will be downward pressure on the prices.

d. The products sold will become more plentiful.

e. The price or quantity of the product sold on the legal market will not change.

Question 18

Use the following figure to answer the questions that follow.

The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P3, predict the resulting surplus or shortage.

Select one:

a. There would be a surplus of 75,000 units.

b. There would be a shortage of 75,000 units.

c. There would be a shortage of 150,000 units.

d. There would be neither a shortage nor a surplus.

e. There would be a surplus of 150,000 units.

Question 19

How would an economist explain a teenager’s continued unemployment where there exists a minimum wage?

Select one:

a. The minimum wage law made it such that the quantity of labor willing to work at that wage was greater than the quantity of labor demanded at that wage.

b. The minimum wage law made it illegal to hire teenagers because they likely would have been unable to work a minimum number of hours.

c. The minimum wage law was nonbinding.

d. The minimum wage law made it such that the market had reached equilibrium.

e. The minimum wage law made it such that the quantity of labor willing to work at that wage was less than the quantity of labor demanded at that wage.

Question 20

Why is raising the minimum wage generally ineffective?

Select one:

a. The minimum wage is usually set below the prevailing equilibrium wage and is frequently nonbinding.

b. Most employees who hold low-wage jobs work in the black market, where the binding price floor doesn’t exist.

c. The minimum wage is an amount suggested by the government, and employers are under no obligation to pay their employees the suggested basic wage.

d. Most employers purchase labor on the black market, where the binding price floor is not present.

e. Employees are often unconcerned with their wages and care more about the benefits that come with the job.

1. If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):

a. substitute good.

b. inferior good.

c. luxury good.

d. necessity good.

e. complement good.

2. If the income elasticity of demand for noodles is 2 and the percentage change in the quantity consumed is 5%, what is the percentage change in income?

a. 2.5%

b. 10%

c. 2.5%

d. 10%

e. 0.4%

3.When Sue received a promotion at work, her income rose by 50%. The income elasticity of demand for steak was found to be 1.5. For her, steak is a(n):

a. inferior good.

b. necessity.

c. complement to potatoes.

d. substitute for chicken.

e. luxury.

4. When you change your quantity demanded of one good because of a change in price of another good, you are acting according to the principle of:

a. price elasticity of demand.

b. cross-price elasticity of demand.

c. income elasticity of demand.

d. price elasticity of supply.

e. income elasticity of supply.

5.If the percentage change in quantity demanded of Good B is 2% and the percentage change in the price of Good A is 10%, what is the cross-price elasticity of demand?

a. 0.20

b. 5

c. 1

d. 5

e. 0.20

6. A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is:

a. unitary elastic.

b. perfectly elastic.

c. perfectly inelastic.

d. relatively elastic.

e. relatively inelastic.

7. Refer to the accompanying figure. At what price would there be the least pressure to form a black market?

a. $5

b. $8

c. $13

d. $15

e. $20

8. What is the long-run consequence of a price ceiling law?

a. A surplus will continue to exist and will grow larger over time.

b. A surplus will continue to exist and will grow smaller over time.

c. A shortage will continue to exist and will grow larger over time.

d. A shortage will continue to exist and will grow smaller over time.

e. The amount of the surplus will not change.

9. Refer to the accompanying figure, which shows both short-run and long-run demand and supply curves. If there is a $4 binding price ceiling imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run?

a. There will be a shortage of 1,500,000 units.

b. There will be a shortage of 800,000 units.

c. There will not be a shortage; there will be a surplus.

d. There will be a shortage of 2,000,000 units.

e. There will be a shortage of 500,000 units.

10. If the local government tells gas stations that they are not allowed to change the price of gas for three weeks during hurricane season, what will be the consequence?

a. Gas stations will be unable to sell all the gas they want at the temporary price ceiling price.

b. Consumers will be unable to buy all the gas they want at the temporary price ceiling price.

c. The supply curve for gas will increase and shift to the right.

d. The demand curve for gas will increase and shift to the right.

e. Equilibrium in the gas market will be achieved.

Refer to the accompanying figure for the next two questions.

11. The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P1, predict the resulting surplus or shortage.

a. There would be a shortage of 75,000 units.

b. There would be a surplus of 75,000 units.

c. There would be neither a shortage nor a surplus.

d. There would be a shortage of 150,000 units.

e. There would be a surplus of 150,000 units.

12. The accompanying figure describes the market for gasoline in a local community. If the government were to place a price floor at P3, predict the resulting surplus or shortage.

a. There would be a shortage of 75,000 units.

b. There would be a surplus of 75,000 units.

c. There would be neither a shortage nor a surplus.

d. There would be a shortage of 150,000 units.

e. There would be a surplus of 150,000 units.

13. As the time frame shifts from the short run to the long run, what happens to producers who are subject to a binding price floor?

a. They are increasingly willing to substitute away from producing the good, and the supply curve becomes less elastic.

b. There are no changes, and their elasticity of supply remains unchanged.

c. They are increasingly willing to substitute away from producing the good, and the supply curve becomes more elastic.

d. They are less willing to substitute away from producing the good, and the supply curve becomes less elastic.

e. They are less willing to substitute away from the good, and the supply curve becomes more elastic.

14. A tax on apples would cause consumers to suffer because:

a. consumer surplus would increase.

b. the price of apples would increase and fewer apples would be purchased.

c. revenues for apple growers would decrease.

d. the government would collect revenue from the tax.

e. producer surplus would decrease.

15. In most cases, taxes reduce economic efficiency because:

a. they lower prices for consumers and cause firms to suffer.

b. they increase firms’ profits at the expense of consumers.

c. taxes are perceived as unfair by some taxpayers.

d. the government often spends tax revenues on programs that some voters don’t like.

e. they reduce consumer surplus and producer surplus.

16. A tax on apples would cause the price paid by consumers to ___________ and the price received by producers to _____________.

a. increase; increase

b.