Question 1

-Refer to Situation 4-1. Before the oil embargo, the price ceiling on gasoline had no noticeable effect on the market. What is the most likely explanation for this?

Accepted Answer

A)  The equilibrium price of gasoline was probably below the price ceiling.
B)  The demand curve for gasoline in the 1970s was vertical.
C)  The supply curve for gasoline in the 1970s was vertical.
D)  The equilibrium price of gasoline was probably above the price ceiling.E) A) and C)
F) All of the above

Question 2

A minimum wage law (that sets the minimum wage above the equilibrium wage)  can be expected to

Accepted Answer

A)  clear the market for unskilled workers.
B)  increase the number of unskilled workers employed.
C)  increase the number of firms in those industries where the law is effective.
D)  reduce the number of unskilled workers employed and/or reduce the number of hours worked by unskilled workers.
E)  all of the aboveF) A) and E)
G) B) and D)

Question 3

When the price of a good rises, the price is transmitting information indicating that the good has become relatively

Accepted Answer

A)  scarcer.
B)  less scarce.
C)  more plentiful in supply.
D)  b and cE) B) and D)
F) A) and D)

Question 4

Exhibit 4-3
 1 units is A) P1. B) P2. C) P3. D) P1 + P2. E) P3 - P1." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-3. The maximum (per-unit)  amount buyers are willing to pay to purchase Q1 units is

Accepted Answer

A)  P1.
B)  P2.
C)  P3.
D)  P1 + P2.
E)  P3 - P1.F) A) and C)
G) A) and B)

Question 5

In the market for a given product, when a price floor is set above the equilibrium price the result will be

Accepted Answer

A)  more exchanges made in the market.
B)  an increase in the supply of the product.
C)  a decrease in the demand for the product.
D)  a deadweight loss.E) A) and D)
F) A) and B)

Question 6

A price floor set above the equilibrium price will

Accepted Answer

A)  clear the market for the good.
B)  result in a shortage of the good.
C)  result in a surplus of the good.
D)  force some firms in this industry to go out of business.E) A) and D)
F) C) and D)

Question 7

Which of the following would not result from a price ceiling (set below the equilibrium price) ?

Accepted Answer

A)  a shortage
B)  fewer exchanges
C)  an increase in supply
D)  nonprice rationing devicesE) B) and D)
F) B) and C)

Question 8

Exhibit 4-6
 
-Refer to Exhibit 4-6. Suppose the minimum wage is set at $5. The result will be

Accepted Answer

A)  unemployment.
B)  a shortage of unskilled labor.
C)  no impact on the unskilled labor market.
D)  a prolonged surplus of unskilled labor.
E)  none of the aboveF) C) and D)
G) A) and C)

Question 9

There are two goods in the economy: tea and rice. If the relative price of tea has increased it could be a result of

Accepted Answer

A)  a decrease in the absolute price of rice.
B)  an increase in the absolute price of tea.
C)  an increase in the absolute price of rice.
D)  a and bE) B) and D)
F) B) and C)

Question 10

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

Accepted Answer

A) True 
 B)False

Question 11

In order for a price floor to have an impact on a market it must be set below the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 4-3
 1 is a price ceiling on good X, the highest price buyers would be willing to pay for good Y is A) P1. B) P2. C) P3. D) P3 - P1. E) P1 + P2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-3. Suppose that the seller creates a tie-in sale between goods X and Y. If P1 is a price ceiling on good X, the highest price buyers would be willing to pay for good Y is

Accepted Answer

A)  P1.
B)  P2.
C)  P3.
D)  P3 - P1.
E)  P1 + P2.F) All of the above
G) B) and E)

Question 13

If the absolute price of a computer is $600 and the relative price of a dining room table is 3 computers, it follows that the absolute price of a dining room table is

Accepted Answer

A)  $180.
B)  $200.
C)  $3,000.
D)  $30,000.
E)  none of the aboveF) A) and B)
G) A) and C)

Question 14

If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

Accepted Answer

A)  $4,000; $2,000
B)  $1,000; $2,000
C)  $2,000; $1,000
D)  a and c
E)  none of the aboveF) None of the above
G) B) and E)

Question 15

Exhibit 4-10
​
​
  Unskilled Labor Market
​
​
-Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. How many thousands of unskilled workers would be employed at the minimum wage?

Accepted Answer

A)  2
B)  3
C)  4
D)  5
E)  7F) B) and E)
G) None of the above

Question 16

Suppose the government sets a price floor that is above the equilibrium price for a given good. It can be said that at the price floor,

Accepted Answer

A)  although sellers are selling all of the product that they desire at this price, the consumers are not able to buy all that they desire.
B)  although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire.
C)  both sellers and buyers are satisfied with the quantity that is being exchanged.
D)  both sellers and buyers are exchanging the equilibrium quantity of this good.
E)  b and dF) C) and D)
G) A) and C)

Question 17

In 1973 and 1979, the U.S. federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Accepted Answer

A) True 
 B)False

Question 18

If the absolute price of a car is $20,000 and the relative price of a computer is 20 cars, it follows that the absolute price of a car is

Accepted Answer

A)  $400.
B)  $4,000.
C)  $100.
D)  $1,000.E) A) and D)
F) B) and C)

Question 19

Exhibit 4-3
 1 is a price floor, then A) the quantity exchanged is Q1. B) there is a surplus in the market for good X. C) it is the lowest price that can legally be charged in the market for good X. D) both b and c E) all of the above" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-3. If price P1 is a price floor, then

Accepted Answer

A)  the quantity exchanged is Q1.
B)  there is a surplus in the market for good X.
C)  it is the lowest price that can legally be charged in the market for good X.
D)  both b and c
E)  all of the aboveF) A) and B)
G) D) and E)

Question 20

A price floor creates a situation in which one party wins and another party loses, and the gains for the winner are equal to the losses for the loser.

Accepted Answer

A) True 
 B)False

Exam 4: Prices Free Controlled and Relative

If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________.

Correct AnswerverifiedShow Answer

Suppose the government sets a price floor that is above the equilibrium price for a given good. It can be said that at the price floor,

Correct AnswerverifiedShow Answer

When the price of a good rises, the price is transmitting information indicating that the good has become relatively

Correct AnswerverifiedShow Answer

Which of the following would not result from a price ceiling (set below the equilibrium price) ?

Correct AnswerverifiedShow Answer

Exhibit 4-3 -Refer to Exhibit 4-3. Suppose that the seller creates a tie-in sale between goods X and Y. If P1 is a price ceiling on good X, the highest price buyers would be willing to pay for good Y is

Correct AnswerverifiedShow Answer

Exhibit 4-10 ​ ​ Unskilled Labor Market ​ ​ -Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. How many thousands of unskilled workers would be employed at the minimum wage?

Correct AnswerverifiedShow Answer

There are two goods in the economy: tea and rice. If the relative price of tea has increased it could be a result of

Correct AnswerverifiedShow Answer

Exhibit 4-3 -Refer to Exhibit 4-3. The maximum (per-unit) amount buyers are willing to pay to purchase Q1 units is

Correct AnswerverifiedShow Answer

Exhibit 4-6 -Refer to Exhibit 4-6. Suppose the minimum wage is set at $5. The result will be

Correct AnswerverifiedShow Answer

A minimum wage law (that sets the minimum wage above the equilibrium wage) can be expected to

Correct AnswerverifiedShow Answer

In 1973 and 1979, the U.S. federal government imposed price ceilings on gasoline which resulted in surpluses of gasoline.

Correct AnswerverifiedShow Answer

Exhibit 4-3 -Refer to Exhibit 4-3. If price P1 is a price floor, then

Correct AnswerverifiedShow Answer

In the market for a given product, when a price floor is set above the equilibrium price the result will be

Correct AnswerverifiedShow Answer

In order for a price floor to have an impact on a market it must be set below the equilibrium price.

Correct AnswerverifiedShow Answer

A price floor creates a situation in which one party wins and another party loses, and the gains for the winner are equal to the losses for the loser.

Correct AnswerverifiedShow Answer

If the absolute price of a computer is $600 and the relative price of a dining room table is 3 computers, it follows that the absolute price of a dining room table is

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price will

Correct AnswerverifiedShow Answer

If the absolute price of a car is $20,000 and the relative price of a computer is 20 cars, it follows that the absolute price of a car is

Correct AnswerverifiedShow Answer

-Refer to Situation 4-1. Before the oil embargo, the price ceiling on gasoline had no noticeable effect on the market. What is the most likely explanation for this?

Correct AnswerverifiedShow Answer

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

Correct AnswerverifiedShow Answer

If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the absolute price of good Z can be and the absolute price of good Y can be .

Correct Answer
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Exhibit 4-3 -Refer to Exhibit 4-3. Suppose that the seller creates a tie-in sale between goods X and Y. If P₁ is a price ceiling on good X, the highest price buyers would be willing to pay for good Y is

Correct Answer
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Exhibit 4-10 Unskilled Labor Market -Refer to Exhibit 4-10. Suppose that the government imposes a minimum wage of $7. How many thousands of unskilled workers would be employed at the minimum wage?

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Exhibit 4-3 -Refer to Exhibit 4-3. The maximum (per-unit) amount buyers are willing to pay to purchase Q₁ units is

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Exhibit 4-3 -Refer to Exhibit 4-3. If price P₁ is a price floor, then

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