Question 1

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________.

Accepted Answer

A)  definitely falls, is indeterminate
B)  is indeterminate, definitely falls
C)  definitely falls, definitely rises
D)  definitely rises, is indeterminateE) None of the above
F) B) and C)

Question 2

-Refer to the above figure. A surplus occurs if the government imposes

Accepted Answer

A)  a price floor at $60.
B)  a price floor at $20.
C)  a price ceiling at $60.
D)  a price ceiling at $20.E) A) and B)
F) A) and C)

Question 3

When the government sets a price floor which is above the equilibrium price

Accepted Answer

A)  a surplus will develop.
B)  a shortage will develop.
C)  the equilibrium price will be maintained.
D)  a price ceiling will follow.E) B) and D)
F) B) and C)

Question 4

When producers would have been willing to accept lower prices at various quantities produced than the market clearing price, the differences are called

Accepted Answer

A)  producer surplus.
B)  monopoly profits.
C)  opportunity cost.
D)  deadweight loss.E) B) and C)
F) None of the above

Question 5

Some oil refineries were damaged by Hurricane Ike of 2008, leading to

Accepted Answer

A)  a decrease in supply of gasoline.
B)  a decrease in quantity supplied of gasoline.
C)  a decrease in demand for gasoline.
D)  a decrease in quantity demanded for gasoline.E) B) and C)
F) C) and D)

Question 6

Because of scarcity, rationing is

Accepted Answer

A)  unimportant because people get what they want.
B)  necessary because people cannot get everything they want.
C)  unimportant because prices clear markets.
D)  not a problem because governments can determine what everybody wants.E) None of the above
F) All of the above

Question 7

Which of the following statements is FALSE?

Accepted Answer

A)  The rationing function of prices is not allowed to freely operate when the government imposes price controls.
B)  Price controls may take the form of price ceilings or price floors.
C)  Price ceilings below the equilibrium price can cause black markets to develop.
D)  Rent controls are examples of price floors.E) A) and B)
F) A) and C)

Question 8

Prices provide the rationing function best when

Accepted Answer

A)  prices are flexible.
B)  prices are inflexible.
C)  they are used in conjunction with queuing.
D)  price controls are in place and ration coupons are used too.E) None of the above
F) B) and D)

Question 9

-Refer to the above figure. Suppose the government imposes a minimum wage rate of $20.00 per hour. This will likely result in

Accepted Answer

A)  a surplus of labor.
B)  a shortage of labor.
C)  an equilibrium in the labor market.
D)  an increase in the demand for labor.E) B) and D)
F) C) and D)

Question 10

If the demand for a product rises and the supply stays the same

Accepted Answer

A)  the market clearing price will fall and the equilibrium quantity will rise.
B)  the market clearing price will rise and the equilibrium quantity will fall.
C)  both the market clearing price and the equilibrium quantity will fall.
D)  both the market clearing price and the equilibrium quantity will rise.E) A) and C)
F) A) and B)

Question 11

An increase in supply causes

Accepted Answer

A)  quantity supplied to decrease.
B)  supply and price to increase.
C)  price to decrease.
D)  price to increase.E) All of the above
F) A) and B)

Question 12

Excess quantity demanded may result from

Accepted Answer

A)  a government-imposed minimum price above market equilibrium.
B)  a government-imposed maximum price below market equilibrium.
C)  an oversupply of output.
D)  technological progress.E) All of the above
F) C) and D)

Question 13

An example of a quantity restriction is

Accepted Answer

A)  the minimum wage.
B)  an import quota.
C)  rent controls.
D)  price supports in agriculture.E) A) and B)
F) A) and C)

Question 14

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

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) A) and C)
F) A) and B)

Question 15

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Accepted Answer

A)  10-20%
B)  20-30%
C)  40-50%
D)  75-80%E) All of the above
F) A) and D)

Question 16

In 2010, a British Petroleum oil rig exploded in the Gulf of Mexico. The explosion resulted in a major oil spill and a decrease in the supply of oil. At the same time, the average price of gasoline decreased. Which of the following best explains the decrease in the price of gasoline?

Accepted Answer

A)  The quantity demanded of gasoline increased.
B)  The demand for gasoline decreased, and the effect of the decrease in demand on the gasoline price was greater than the price effect of the decrease in supply.
C)  The demand for gasoline increased, and the effect of the increase in demand on the gasoline price was less than the price effect of the decrease in supply.
D)  The demand for gasoline remained unchanged.E) A) and B)
F) A) and D)

Question 17

-Refer to the above figure. Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA. Which of the following is TRUE?

Accepted Answer

A)  Only quantity supplied has increased.
B)  Only quantity demanded has decreased.
C)  Supply has increased.
D)  Supply has decreased.E) A) and C)
F) C) and D)

Question 18

-Refer to the above figure. If a price ceiling of $3 was set

Accepted Answer

A)  the quantity sold would be 80 units.
B)  there would be a surplus of 40 units.
C)  there would be a shortage of 40 units.
D)  there would be a shortage of 20 units.E) A) and B)
F) All of the above

Question 19

The total amount of consumer surplus and producer surplus is at its maximum when

Accepted Answer

A)  consumers and producers are allowed to trade at the market clearing price.
B)  the government imposes a price floor that is higher than the market clearing price.
C)  the government imposes a price ceiling that is lower than the market clearing price.
D)  free market exchanges do not exist.E) B) and C)
F) B) and D)

Question 20

Which of the following is a main characteristic of exchanges in the market system?

Accepted Answer

A)  Decisions to trade are based on individuals' self interest.
B)  Exchanges are highly regulated by the government.
C)  Sellers hire economists to determine the market clearing price.
D)  Exchanges are part of the legislative imperative.E) None of the above
F) A) and C)

Exam 4: Extensions of Demand and Supply Analysis

Which of the following statements is FALSE?

Correct AnswerverifiedShow Answer

Some oil refineries were damaged by Hurricane Ike of 2008, leading to

Correct AnswerverifiedShow Answer

Prices provide the rationing function best when

Correct AnswerverifiedShow Answer

When the government sets a price floor which is above the equilibrium price

Correct AnswerverifiedShow Answer

-Refer to the above figure. Suppose the government imposes a minimum wage rate of $20.00 per hour. This will likely result in

Correct AnswerverifiedShow Answer

-Refer to the above figure. If a price ceiling of $3 was set

Correct AnswerverifiedShow Answer

-Refer to the above figure. Suppose that the supply curve shifts from SA to SB while the demand curve remains at DA. Which of the following is TRUE?

Correct AnswerverifiedShow Answer

The total amount of consumer surplus and producer surplus is at its maximum when

Correct AnswerverifiedShow Answer

When producers would have been willing to accept lower prices at various quantities produced than the market clearing price, the differences are called

Correct AnswerverifiedShow Answer

An example of a quantity restriction is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Because of scarcity, rationing is

Correct AnswerverifiedShow Answer

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________.

Correct AnswerverifiedShow Answer

If the demand for a product rises and the supply stays the same

Correct AnswerverifiedShow Answer

Since the minimum wage rate began it has typically stayed at about what percentage of the average manufacturing wage?

Correct AnswerverifiedShow Answer

-Refer to the above figure. A surplus occurs if the government imposes

Correct AnswerverifiedShow Answer

Excess quantity demanded may result from

Correct AnswerverifiedShow Answer

An increase in supply causes

Correct AnswerverifiedShow Answer

In 2010, a British Petroleum oil rig exploded in the Gulf of Mexico. The explosion resulted in a major oil spill and a decrease in the supply of oil. At the same time, the average price of gasoline decreased. Which of the following best explains the decrease in the price of gasoline?

Correct AnswerverifiedShow Answer

Which of the following is a main characteristic of exchanges in the market system?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price and the equilibrium quantity .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified