Question 1

What will happen when there is a rightward shift in the demand curve?

Accepted Answer

A)  The product price will instantaneously adjust downward.
B)  Product prices do not change in this situation.
C)  Producers will decrease the product price.
D)  A new, higher price is not instantaneously achieved, but the price will rise over time.E) A) and B)
F) A) and C)

Question 2

Which of the following is most likely to generate a surplus?

Accepted Answer

A)  A price floor
B)  A price ceiling
C)  An illegal market
D)  All of theseE) A) and B)
F) A) and D)

Question 3

Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

Accepted Answer

A)  create a shortage of agricultural products.
B)  result in the quantity of these products supplied exceeding the quantity demanded at the floor price.
C)  benefit taxpayers, who receive subsidies from producers that the price support program forces to sell to the government at an artificially established price.
D)  benefit consumers, who are willing and able to purchase more agricultural products at the floor price.E) None of the above
F) B) and C)

Question 4

Rent control is an example of

Accepted Answer

A)  a price floor.
B)  a price ceiling.
C)  the rationing function of prices not working.
D)  the government increasing the demand for certain products.E) B) and D)
F) B) and C)

Question 5

An increase in demand and a decrease in supply will lead to an

Accepted Answer

A)  unambiguous increases in both price and quantity.
B)  unambiguous decreases in both price and quantity.
C)  an unambiguous increase in quantity, but the effect on price is indeterminate.
D)  an unambiguous increase in price, but the effect on quantity is indeterminate.E) A) and B)
F) None of the above

Question 6

If one day it was discovered that lime juice caused cancer, which of the following would likely result?

Accepted Answer

A)  The supply curve for lime juice would shift to the right.
B)  The supply curve for lime juice would shift to the left.
C)  The demand curve for lime juice would shift to the right.
D)  The demand curve for lime juice would shift to the left.E) B) and D)
F) All of the above

Question 7

A price floor that is set above market equilibrium will cause

Accepted Answer

A)  an excess quantity demanded.
B)  a shortage.
C)  a surplus.
D)  queuing on the part of consumers.E) A) and B)
F) A) and D)

Question 8

If price increases and the quantity purchased increases, we know that

Accepted Answer

A)  supply increased.
B)  supply decreased.
C)  demand increased.
D)  demand decreased.E) A) and B)
F) B) and C)

Question 9

When a government increases an effective price ceiling for a product

Accepted Answer

A)  the shortage in the market will be reduced.
B)  the shortage in the market will be increased.
C)  the surplus in the market will be reduced.
D)  the surplus in the market will increase.E) A) and C)
F) All of the above

Question 10

If supply and demand both simultaneously increase,

Accepted Answer

A)  the market clearing price definitely rises, and the equilibrium quantity definitely falls.
B)  the market clearing price definitely rises, and the effect on the equilibrium quantity is indeterminate.
C)  the market clearing price definitely falls ,and the effect on the equilibrium quantity is indeterminate.
D)  the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely rises.E) B) and C)
F) None of the above

Question 11

All of the following are examples of nonprice rationing devices EXCEPT

Accepted Answer

A)  price controls.
B)  queues.
C)  black markets.
D)  waiting lists.E) B) and C)
F) A) and D)

Question 12

-Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York. The game was sold out and some fans could not get tickets. This suggests that

Accepted Answer

A)  selling price was below equilibrium price.
B)  selling price was above equilibrium price.
C)  selling price was at equilibrium.
D)  the game was advertised too heavily.E) A) and B)
F) All of the above

Question 13

-Government imposed price controls often lead to

Accepted Answer

A)  illegal trades of the good.
B)  the most efficient use of resources.
C)  the equilibrium solution in terms of price and quantity.
D)  maximization of profits.E) B) and D)
F) None of the above

Question 14

-In the above figure, a shortage could be caused by a government price ceiling set at

Accepted Answer

A)  $1.00.
B)  $2.00.
C)  $2.50.
D)  $3.00.E) None of the above
F) All of the above

Question 15

Prices in a market economy perform a rationing function because they reflect

Accepted Answer

A)  the demand of all buyers in the market.
B)  the extent to which the goods are necessities.
C)  the strength of the supply curve.
D)  the relative scarcity of the goods.E) C) and D)
F) B) and D)

Question 16

What has been the market outcome of government-enforced price floors for agricultural products?

Accepted Answer

A)  Not enough food has been produced.
B)  Farmers have been made worse off.
C)  A shortage of agricultural products has resulted.
D)  A surplus of agricultural products has resulted.E) A) and D)
F) B) and C)

Question 17

As a result of establishing a legal minimum wage above the market clearing wage,

Accepted Answer

A)  there will be a shortage of workers.
B)  firms will hire fewer workers.
C)  firms will hire more workers.
D)  fewer workers will want to work.E) None of the above
F) A) and C)

Question 18

If both supply and demand simultaneously decrease,

Accepted Answer

A)  the market clearing price definitely rises, and the equilibrium quantity definitely falls.
B)  the market clearing price definitely rises, and the effect on the equilibrium quantity is indeterminate.
C)  the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate.
D)  the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely falls.E) A) and C)
F) A) and D)

Question 19

Rationing through the price system

Accepted Answer

A)  leads to an inefficient use of available resources.
B)  leads to high prices.
C)  works only with government interference.
D)  leads to an efficient use of available resources.E) A) and B)
F) B) and C)

Question 20

In which of the following situations will market clearing price decrease and the equilibrium quantity increase?

Accepted Answer

A)  an increase in demand with no change in supply
B)  an increase in supply with no change in demand
C)  a decrease in supply with no change in demand
D)  a decrease in demand with no change in supplyE) All of the above
F) None of the above

Exam 4: Extensions of Demand and Supply Analysis

If supply and demand both simultaneously increase,

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Rent control is an example of

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An increase in demand and a decrease in supply will lead to an

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All of the following are examples of nonprice rationing devices EXCEPT

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As a result of establishing a legal minimum wage above the market clearing wage,

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-Suppose that 20,000 tickets were sold at $120 for an NBA game at Madison Square Garden in New York. The game was sold out and some fans could not get tickets. This suggests that

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Prices in a market economy perform a rationing function because they reflect

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-Government imposed price controls often lead to

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If price increases and the quantity purchased increases, we know that

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Rationing through the price system

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Agriculture price supports that establish a price floor at which agricultural products may be purchased that exceeds the market clearing price

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-In the above figure, a shortage could be caused by a government price ceiling set at

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What has been the market outcome of government-enforced price floors for agricultural products?

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If one day it was discovered that lime juice caused cancer, which of the following would likely result?

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When a government increases an effective price ceiling for a product

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A price floor that is set above market equilibrium will cause

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In which of the following situations will market clearing price decrease and the equilibrium quantity increase?

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What will happen when there is a rightward shift in the demand curve?

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Which of the following is most likely to generate a surplus?

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If both supply and demand simultaneously decrease,

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