HW2 - Chapter 6

Minimum-wage laws dictate

• only a maximum wage that firms may pay workers.

• only a minimum wage that firms may pay workers.

• the exact wage that firms must pay workers.

• both a minimum wage and a maximum wage that firms may pay workers.

The presence of a price control in a market for a good or service usually is an indication that

• an insufficient quantity of the good or service was being produced in that market to meet the public’s need.

• policymakers correctly believed that price controls would generate no inequities of their own once imposed.

• policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.

• the usual forces of supply and demand were not able to establish an equilibrium price in that market.

If a price ceiling is not binding, then

• the market will be less efficient than it would be without the price ceiling.

• there will be no effect on the market price or quantity sold.

• there will be a surplus in the market.

• there will be a shortage in the market.

If the government removes a binding price ceiling from a market, then the price paid by buyers will

• decrease, and the quantity sold in the market will increase.

• increase, and the quantity sold in the market will decrease.

• decrease, and the quantity sold in the market will decrease.

• increase, and the quantity sold in the market will increase.

A shortage results when a

• nonbinding price ceiling is removed from a market.

• binding price ceiling is imposed on a market.

• nonbinding price ceiling is imposed on a market.

• binding price ceiling is removed from a market.

The imposition of a binding price ceiling on a market causes

• quantity demanded to be equal to quantity supplied.

• quantity demanded to be less than quantity supplied.

• quantity demanded to be greater than quantity supplied.

• the price of the good to be greater than its equilibrium price.

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

• the supply of treadmills will decrease.

• the demand for treadmills will increase.

• a surplus of treadmills will develop.

• a shortage of treadmills will develop.

If the government removes a binding price floor from a market, then the price paid by buyers will

• decrease, and the quantity sold in the market will increase.

• decrease, and the quantity sold in the market will decrease.

• increase, and the quantity sold in the market will increase.

• increase, and the quantity sold in the market will decrease.

Refer to Figure 6-3. A government-imposed price of $24 in this market is an example of a

• nonbinding price floor that creates a surplus.

• nonbinding price ceiling that creates a shortage.

• binding price floor that creates a surplus.

• binding price ceiling that creates a shortage.

Refer to Figure 6-4. In graph (b), there will be

• a shortage.

• equilibrium in the market.

• a surplus.

• line of people waiting to buy the goods