Question 1

Exhibit 4-9
 
-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $13._________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.

Accepted Answer

A)   150;220
B)   150;150
C)   110;180
D)   150;90E) All of the above
F) A) and B)

Question 2

It is possible for the absolute price of a good to rise at the same time that the good is becoming relatively cheaper.

Accepted Answer

A) True 
 B)False

Question 3

Price serves as a

Accepted Answer

A)   rationing device.
B)   transmitter of information.
C)   means of determining who gets what of the available limited resources and goods.
D)   a and b
E)   all of the aboveF) None of the above
G) C) and D)

Question 4

A price ceiling is usually set _____________ the equilibrium price.

Accepted Answer

A)   above
B)   at
C)   below
D)   at or aboveE) A) and C)
F) B) and C)

Question 5

A price floor is a government-mandated

Accepted Answer

A)   minimum price below which legal trades cannot be made.
B)   maximum price above which legal trades cannot be made.
C)   minimum price at which all units of the good must be legally sold.
D)   minimum price below which legal trades can be made.E) C) and D)
F) A) and D)

Question 6

If the price of good X is $100 and the price of good Y is $40,it follows that the relative price of one unit of good Y is ___________ unit(s) of good X.

Accepted Answer

A)   0.40
B)   0.20
C)   2.50
D)   4.00
E)   There is not enough information to answer the question.F) A) and D)
G) A) and C)

Question 7

Exhibit 4-8 
-Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the producers' surplus will equal

Accepted Answer

A)   area 1 + 2 + 3
B)   area 1 + 2 + 4
C)   area 3 + 5
D)   area 1 + 2 + 3 + 4 + 5
E)   area 6F) A) and B)
G) D) and E)

Question 8

Exhibit 4-9
 
-Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10._________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.

Accepted Answer

A)   150;220
B)   150;70
C)   110;180
D)   150;90E) A) and D)
F) A) and B)

Question 9

If the absolute price of a computer is $1,500 and the relative price of a dining room table is 2 computers,it follows that the absolute price of a dining room table is

Accepted Answer

A)   $10,000.
B)   $750.
C)   $3,000.
D)   $30,000.
E)   none of the aboveF) All of the above
G) A) and B)

Question 10

If the relative price of one unit of good X is 5 units of good Y,then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________.

Accepted Answer

A)   $20,000;$10,000
B)   $40,000;$8,000
C)   $30,000;$5,0000
D)   $5,000;$40,000
E)   a and cF) B) and E)
G) A) and C)

Question 11

-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 close to the ceiling price and probably below it.
B)   The demand curve for gasoline in the 1970s was quite different from today's.
C)   The supply curve for gasoline in the 1970s was quite different from today's.
D)   The effects of price ceilings are dependent upon the benevolence of the government imposing them.E) A) and B)
F) A) and C)

Question 12

Exhibit 4-1 
-Refer to Exhibit 4-1.In a free market,________ units of the good would be exchanged.With a price ceiling,_______ units of the good would be exchanged.

Accepted Answer

A)   125;75
B)   75;125
C)   175;125
D)   125;175E) B) and D)
F) A) and D)

Question 13

Exhibit 4-8 F.What is the size of the consumers' surplus at PF? A)  area 5 B)  area 6 C)  area 1 + 2 + 4 D)  area 1" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the consumers' surplus at PF?

Accepted Answer

A)   area 5
B)   area 6
C)   area 1 + 2 + 4
D)   area 1E) A) and D)
F) B) and C)

Question 14

If the price of good X is $50 and the price of good Y is $25,it follows that the relative price of one unit of good X is _____________ unit(s) of good Y.

Accepted Answer

A)   1.00
B)   2.00
C)   0.75
D)   1.33
E)   0.50F) A) and D)
G) A) and E)

Question 15

-Refer to Situation 4-1.Because price controls were in effect at the time the embargo occurred,an economist would predict that

Accepted Answer

A)   the number of dollars one would need to pay at the pump for a full tank of gasoline would increase sharply.
B)   the number of dollars one would need to pay at the pump for a full tank of gasoline would decline sharply.
C)   long waiting lines and black markets would appear.
D)   a surplus of gasoline would result.E) B) and C)
F) A) and B)

Question 16

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) B) and E)
G) A) and E)

Question 17

A price floor (set above the equilibrium price) on rice will

Accepted Answer

A)   force otherwise profitable farmers out of business.
B)   result in a shortage of rice.
C)   result in a surplus of rice.
D)   clear the market for rice.
E)   both a and bF) B) and C)
G) C) and D)

Question 18

If the price of good X is $90 and the price of good Y is $30,it follows that the relative price of one unit of good Y is ___________ unit(s) of good X.

Accepted Answer

A)   0.33
B)   1.33
C)   3.00
D)   2.00
E)   There is not enough information to answer the question.F) A) and E)
G) All of the above

Question 19

If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/20 of a car,it follows that the absolute price of a laptop is

Accepted Answer

A)   $10,000.
B)   $1,000.
C)   $4,000.
D)   $2,000.
E)   There is not enough information to answer the question.F) C) and E)
G) A) and B)

Question 20

At the minimum wage (set above the equilibrium wage) ,

Accepted Answer

A)   all individuals who end up working are paid less than if they were paid the equilibrium wage.
B)   none of the workers will lose there jobs or find themselves working fewer hours.
C)   none of the individuals who end up working are paid more than if they were paid the equilibrium wage.
D)   there will be fewer people working (or fewer labor hours demanded) than at the equilibrium wage.
E)   none of the aboveF) B) and D)
G) All of the above

Exam 4: Prices: Free, controlled, and Relative

A price floor is a government-mandated

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If the relative price of one unit of good X is 5 units of good Y,then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________.

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If the price of good X is $100 and the price of good Y is $40,it follows that the relative price of one unit of good Y is ___________ unit(s) of good X.

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If the price of good X is $50 and the price of good Y is $25,it follows that the relative price of one unit of good X is _____________ unit(s) of good Y.

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Price serves as a

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Exhibit 4-9 -Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $13._________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.

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It is possible for the absolute price of a good to rise at the same time that the good is becoming relatively cheaper.

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Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the consumers' surplus at PF?

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If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/20 of a car,it follows that the absolute price of a laptop is

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-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?

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A price floor (set above the equilibrium price) on rice will

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Exhibit 4-1 -Refer to Exhibit 4-1.In a free market,________ units of the good would be exchanged.With a price ceiling,_______ units of the good would be exchanged.

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If the absolute price of a computer is $1,500 and the relative price of a dining room table is 2 computers,it follows that the absolute price of a dining room table is

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A price ceiling is usually set _____________ the equilibrium price.

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Exhibit 4-8 -Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the producers' surplus will equal

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-Refer to Situation 4-1.Because price controls were in effect at the time the embargo occurred,an economist would predict that

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If the price of good X is $90 and the price of good Y is $30,it follows that the relative price of one unit of good Y is ___________ unit(s) of good X.

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At the minimum wage (set above the equilibrium wage) ,

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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 __________.

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Exhibit 4-9 -Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10._________ units would be exchanged in a free market,and ____________ units would be exchanged with the price ceiling in effect.

Correct AnswerverifiedShow Answer

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If the relative price of one unit of good X is 5 units of good Y,then it follows that the absolute price of good X can be and the absolute price of good Y can be .

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Exhibit 4-9 -Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $13._ units would be exchanged in a free market,and ____ units would be exchanged with the price ceiling in effect.

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Exhibit 4-8 -Refer to Exhibit 4-8.Suppose that wheat producers lobby the government for a price floor and receive one.This price floor is set at P_F.What is the size of the consumers' surplus at P_F?

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Exhibit 4-1 -Refer to Exhibit 4-1.In a free market,__ units of the good would be exchanged.With a price ceiling,_ units of the good would be exchanged.

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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 .

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Exhibit 4-9 -Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of $10._ units would be exchanged in a free market,and ____ units would be exchanged with the price ceiling in effect.

Correct Answer
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