question
Either a price floor or a price ceiling will result in a smaller quantity exchanged than if the price was at its equilibrium level. T/F
answer
True
question
Either a price floor or a price ceiling above the equilibrium price would cause a surplus. T/F
answer
False
question
A binding price ceiling causes quantity demanded to be less than quantity supplied. T/F
answer
False
question
A price ceiling set above the equilibrium price causes a surplus in the market. T/F
answer
True
question
If a price floor is not binding, then it will have no effect on the market. T/F
answer
True
question
A simultaneous increase in demand and decrease in supply would lead to:
A. increase in the equilibrium price and a decrease in the quantity sold.
B. increase in both the equilibrium price and the quantity sold.
C. decrease in both the equilibrium price and the quantity sold.
D. uncertain effect on the equilibrium quantity but an increase in the equilibrium price.
A. increase in the equilibrium price and a decrease in the quantity sold.
B. increase in both the equilibrium price and the quantity sold.
C. decrease in both the equilibrium price and the quantity sold.
D. uncertain effect on the equilibrium quantity but an increase in the equilibrium price.
answer
D. uncertain effect on the equilibrium quantity but an increase in the equilibrium price.
question
A more efficient process for refining oil into gasoline is developed. As a result, the market price of gasoline:
A. and the quantity of gasoline purchased both increase.
B. increases and the quantity of gasoline purchased falls.
C. decreases and the quantity of gasoline purchased rises.
D. decreases and the demand curve for gasoline shifts to the right.
A. and the quantity of gasoline purchased both increase.
B. increases and the quantity of gasoline purchased falls.
C. decreases and the quantity of gasoline purchased rises.
D. decreases and the demand curve for gasoline shifts to the right.
answer
C. decreases and the quantity of gasoline purchased rises.
question
A shift in the supply curve of bicycles resulting from higher steel prices will lead to:
A. higher prices of bicycles.
B. lower prices of bicycles.
C. a shift in the demand curve for bicycles.
D. a larger output of bicycles.
A. higher prices of bicycles.
B. lower prices of bicycles.
C. a shift in the demand curve for bicycles.
D. a larger output of bicycles.
answer
A. higher prices of bicycles.
question
In January, 2,500 quarts of ice cream are sold in Boston at $2 per quart. In February, 3,000 quarts are sold at $2.50 a quart. This change in the price and quantity sold of ice cream may have been caused by:
A. a reduction in wages in the Boston area.
B. the introduction of labor-saving, automated ice cream packing machinery.
C. the release of a medical study showing that ice cream consumption improves mental health.
D. the decision by Boston ice cream sellers to eliminate discount coupons.
A. a reduction in wages in the Boston area.
B. the introduction of labor-saving, automated ice cream packing machinery.
C. the release of a medical study showing that ice cream consumption improves mental health.
D. the decision by Boston ice cream sellers to eliminate discount coupons.
answer
C. the release of a medical study showing that ice cream consumption improves mental health.
question
When the demand and supply of grapes both increase at the same time, we can safely predict that the:
A. price of grapes will fall.
B. price of grapes will rise.
C. quantity of grapes bought and sold will fall.
D. quantity of grapes bought and sold will rise.
A. price of grapes will fall.
B. price of grapes will rise.
C. quantity of grapes bought and sold will fall.
D. quantity of grapes bought and sold will rise.
answer
D. quantity of grapes bought and sold will rise.
question
There is an increase in demand for personal computers at the same time their input costs fall. We would expect that:
A. price will fall, but the effect on quantity sold is uncertain.
B. the quantity sold will decline, but the effect on price is uncertain.
C. the quantity sold will increase, but the effect on price is uncertain.
D. price will rise, but the effect on quantity sold is uncertain.
Save
A. price will fall, but the effect on quantity sold is uncertain.
B. the quantity sold will decline, but the effect on price is uncertain.
C. the quantity sold will increase, but the effect on price is uncertain.
D. price will rise, but the effect on quantity sold is uncertain.
Save
answer
C. the quantity sold will increase, but the effect on price is uncertain.
question
price p/month gallons dem. p/mon gallons suppl. p/mon
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government intervenes in the market for milk and sets a price floor of $3.50, the result is:
A. a shortage of 500 gallons of milk.
B. a surplus of 500 gallons of milk.
C. that some consumers will not be able to buy milk who wish to purchase it at that price.
D. both a. and c. are correct.
Save
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government intervenes in the market for milk and sets a price floor of $3.50, the result is:
A. a shortage of 500 gallons of milk.
B. a surplus of 500 gallons of milk.
C. that some consumers will not be able to buy milk who wish to purchase it at that price.
D. both a. and c. are correct.
Save
answer
B. a surplus of 500 gallons of milk.
question
price p/month gallons dem. p/mon gallons suppl. p/mon
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government were to remove a $3.50 price floor in the milk market, the result would be:
A. a decrease in price and increase in the quantity of milk supplied.
B. a decrease in price and increase in the quantity of milk demanded.
C. an increase in both price and the quantity of milk supplied.
D. an increase in both price and the quantity of milk demanded.
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government were to remove a $3.50 price floor in the milk market, the result would be:
A. a decrease in price and increase in the quantity of milk supplied.
B. a decrease in price and increase in the quantity of milk demanded.
C. an increase in both price and the quantity of milk supplied.
D. an increase in both price and the quantity of milk demanded.
answer
B. a decrease in price and increase in the quantity of milk demanded.
question
price p/month gallons dem. p/mon gallons suppl. p/mon
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon, the result is:
A. a shortage of exactly 1,200 gallons of milk.
B. a surplus of exactly 1,000 gallons of milk.
C. that some consumers will not be able to buy milk at that price.
D. that some sellers will not be able to sell available milk at that price.
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon, the result is:
A. a shortage of exactly 1,200 gallons of milk.
B. a surplus of exactly 1,000 gallons of milk.
C. that some consumers will not be able to buy milk at that price.
D. that some sellers will not be able to sell available milk at that price.
answer
C. that some consumers will not be able to buy milk at that price.
question
price p/month gallons dem. p/mon gallons suppl. p/mon
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government were to remove a price ceiling of $2.00 per gallon in the milk market, the result would be:
A. a decrease in price and increase in the quantity of milk supplied.
B. a decrease in price and increase in the quantity of milk demanded.
C. an increase in both price and the quantity of milk supplied.
D. an increase in both price and the quantity of milk demanded.
$4.00 400 1,400
$3.50 600 1,100
$3.00 800 800
$2.50 1000 500
$2.00 1200 200
$1.50 1400 50
$1.00 1600 0
Refer to Exhibit 5-7. If the government were to remove a price ceiling of $2.00 per gallon in the milk market, the result would be:
A. a decrease in price and increase in the quantity of milk supplied.
B. a decrease in price and increase in the quantity of milk demanded.
C. an increase in both price and the quantity of milk supplied.
D. an increase in both price and the quantity of milk demanded.
answer
C. an increase in both price and the quantity of milk supplied.
question
Ceteris paribus, if negotiations lead to lower wages for airline employees, what will be the result in the market for air travel?
A. an increase in equilibrium price and an increase in equilibrium quantity
B. an increase in equilibrium price and a decrease in equilibrium quantity
C. a decrease in equilibrium price and an increase in equilibrium quantity
D. a decrease in equilibrium price and a decrease in equilibrium quantity
A. an increase in equilibrium price and an increase in equilibrium quantity
B. an increase in equilibrium price and a decrease in equilibrium quantity
C. a decrease in equilibrium price and an increase in equilibrium quantity
D. a decrease in equilibrium price and a decrease in equilibrium quantity
answer
C. a decrease in equilibrium price and an increase in equilibrium quantity
question
Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n):
A. decrease in supply.
B. decrease in demand.
C. increase in supply.
D. increase in demand.
A. decrease in supply.
B. decrease in demand.
C. increase in supply.
D. increase in demand.
answer
A. decrease in supply.
question
Which of the following would most likely increase the price of chicken, a normal good?
A. a reduction in the price of grains used to produce chicken feed
B. a reduction in the price of beef, a substitute for chicken
C. unusually hot weather that kills millions of chickens before they are ready for market
D. a decrease in consumer income
A. a reduction in the price of grains used to produce chicken feed
B. a reduction in the price of beef, a substitute for chicken
C. unusually hot weather that kills millions of chickens before they are ready for market
D. a decrease in consumer income
answer
C. unusually hot weather that kills millions of chickens before they are ready for market
question
Ceteris paribus, the fear among travelers created by the 9-11 attacks would have what impact on the market for air travel?
A. an increase in equilibrium price and an increase in equilibrium quantity.
B. an increase in equilibrium price and a decrease in equilibrium quantity.
C. a decrease in equilibrium price and an increase in equilibrium quantity.
D. a decrease in equilibrium price and a decrease in equilibrium quantity.
A. an increase in equilibrium price and an increase in equilibrium quantity.
B. an increase in equilibrium price and a decrease in equilibrium quantity.
C. a decrease in equilibrium price and an increase in equilibrium quantity.
D. a decrease in equilibrium price and a decrease in equilibrium quantity.
answer
D. a decrease in equilibrium price and a decrease in equilibrium quantity.
question
There is an increase in both consumer income and in the price of jet fuel, an important resource used to produce air travel. If air travel is a normal good, how will these changes influence the price and quantity purchased of air travel? The price of air travel will (be) ____ and quantity purchased will (be) ____.
A. indeterminate; decrease
B. increase; indeterminate
C. decrease; indeterminate
D. indeterminate; increase
A. indeterminate; decrease
B. increase; indeterminate
C. decrease; indeterminate
D. indeterminate; increase
answer
B. increase; indeterminate
question
If both the supply and demand for computer games increase, then the equilibrium price of the games:
A. is indeterminate and the equilibrium quantity rises.
B. is indeterminate and the equilibrium quantity falls.
C. falls and the equilibrium quantity also falls.
D. falls and the change in equilibrium quantity is indeterminate.
A. is indeterminate and the equilibrium quantity rises.
B. is indeterminate and the equilibrium quantity falls.
C. falls and the equilibrium quantity also falls.
D. falls and the change in equilibrium quantity is indeterminate.
answer
A. is indeterminate and the equilibrium quantity rises.
question
If market demand decreases and market supply increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.
A. indeterminate; decrease
B. indeterminate; increase
C. decrease; indeterminate
D. increase; indeterminate
A. indeterminate; decrease
B. indeterminate; increase
C. decrease; indeterminate
D. increase; indeterminate
answer
A. indeterminate; decrease
question
"Rent Control", a form of price control in which the government sets a limit to what apartment owners can charge a tenant, is a mechanism of:
A. cost cutting.
B. price ceiling.
C. price floor.
D. non-equilibrium pricing.
A. cost cutting.
B. price ceiling.
C. price floor.
D. non-equilibrium pricing.
answer
...
question
If nuts and bolts are complements, an increase in the price of nuts caused by a change in the supply of nuts will:
A. increase the number of bolts sold.
B. decrease the demand for nuts
C. increase the price of bolts.
D. decrease the number of bolts sold
A. increase the number of bolts sold.
B. decrease the demand for nuts
C. increase the price of bolts.
D. decrease the number of bolts sold
answer
D. decrease the number of bolts sold
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