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WorksheetsECO102 Chap 6
Total questions: 50
Worksheet time: 25mins
Which of the following is not correct?
Economists have two roles: scientist and policy adviser.
As scientists, economists develop and test theories to explain the world around them.
Economic policies rarely have effects that their architects did not intend or anticipate.
As policy advisers, economists use their theories to help change the world for the better.
Which of the following is not an example of a public policy?
rent-control laws
minimum-wage laws
taxes
equilibrium laws
Minimum-wage laws dictate
the exact wage that firms must pay workers.
a maximum wage that firms may pay workers.
a minimum wage that firms may pay workers.
both a minimum wage and a maximum wage that firms may pay workers.
Price controls are usually enacted
as a means of raising revenue for public purposes.
when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
when policymakers tax a good.
All of the above are correct.
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.
the usual forces of supply and demand were not able to establish an equilibrium price in that market.
policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
policymakers correctly believed that price controls would generate no inequities of their own once imposed.
Price controls
always produce a fair outcome.
always produce an efficient outcome.
can generate inequities of their own.
All of the above are correct.
If the government removes a tax on a good, then the quantity of the good sold will
increase.
decrease.
not change.
All of the above are possible.
In a competitive market free of government regulation,
price adjusts until quantity demanded is greater than quantity supplied.
price adjusts until quantity demanded is less than quantity supplied.
price adjusts until quantity demanded equals quantity supplied.
supply adjusts to meet demand at every price.
Which of the following is not a function of prices in a market system?
Prices have the crucial job of balancing supply and demand.
Prices send signals to buyers and sellers to help them make rational economic decisions.
Prices coordinate economic activity.
Prices ensure an equal distribution of goods and services among consumers.
A legal maximum on the price at which a good can be sold is called a price
floor.
subsidy.
support.
ceiling.
A price ceiling is
often imposed on markets in which "cutthroat competition" would prevail without a price ceiling.
a legal maximum on the price at which a good can be sold.
often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
All of the above are correct.
Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?
Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole.
Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.
Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.
Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.
If a price ceiling is not binding, then
the equilibrium price is above the price ceiling.
the equilibrium price is below the price ceiling.
it has no legal enforcement mechanism.
None of the above is correct because all price ceilings must be binding.
If a price ceiling is not binding, then
there will be a surplus in the market.
there will be a shortage in the market.
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.
If a nonbinding price ceiling is imposed on a market, then the
quantity sold in the market will decrease.
quantity sold in the market will stay the same.
price in the market will increase.
price in the market will decrease.
A price ceiling will be binding only if it is set
equal to the equilibrium price.
above the equilibrium price.
below the equilibrium price.
either above or below the equilibrium price.
Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,
a smaller quantity of the good is bought and sold.
a smaller quantity of the good is demanded.
a larger quantity of the good is supplied.
the price rises above the previous equilibrium.
If the government removes a binding price ceiling from a market, then the price paid by buyers will
increase, 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 increase.
decrease, and the quantity sold in the market will decrease.
When a binding price ceiling is imposed on a market,
price no longer serves as a rationing device.
the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling.
all buyers benefit.
All of the above are correct.
If the government removes a binding price ceiling from a market, then the price received by sellers will
decrease, and the quantity sold in the market will decrease.
decrease, and the quantity sold in the market will increase.
increase, and the quantity sold in the market will decrease.
increase, and the quantity sold in the market will increase.
A price ceiling is binding when it is set
above the equilibrium price, causing a shortage.
above the equilibrium price, causing a surplus.
below the equilibrium price, causing a shortage.
below the equilibrium price, causing a surplus.
To say that a price ceiling is binding is to say that the price ceiling
results in a shortage.
causes quantity demanded to exceed quantity supplied.
is set below the equilibrium price.
All of the above are correct.
A shortage results when a
nonbinding price ceiling is imposed on a market.
nonbinding price ceiling is removed from a market.
binding price ceiling is imposed on a market.
binding price ceiling is removed from a market.
To say that a price ceiling is binding is to say that the price ceiling
results in a surplus.
is set above the equilibrium price.
causes quantity demanded to exceed quantity supplied.
All of the above are correct.
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 demand for treadmills will increase.
the supply of treadmills will decrease.
a shortage of treadmills will develop.
All of the above are correct.
If a binding price ceiling is imposed on the baby formula market, then
the quantity of baby formula demanded will increase.
the quantity of baby formula supplied will decrease.
a shortage of baby formula will develop.
All of the above are correct.
When a binding price ceiling is imposed on a market to benefit buyers,
every buyer in the market benefits.
every buyer and seller in the market benefits.
every buyer who wants to buy the good will be able to do so, but only if he waits in long lines.
some buyers will not be able to buy any amount of the good.
Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?
Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole.
Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor.
Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.
Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
the quantity of physicals demanded increases.
there is shortage of physicals.
the quantity of physicals supplied decreases.
All of the above are correct.
If a price floor is not binding, then
the equilibrium price is above the price floor.
the equilibrium price is below the price floor.
there will be a surplus in the market.
there will be a shortage in the market.
If a price floor is not binding, then
the equilibrium price is above the price floor.
the equilibrium price is below the price floor.
there will be a surplus in the market.
there will be a shortage in the market.
After a binding price floor becomes effective, a
smaller quantity of the good is bought and sold.
a larger quantity of the good is demanded.
a smaller quantity of the good is supplied.
All of the above are correct.
A nonbinding price floor
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.
(iii) only
(iv) only
(i) and (iii) only
(ii) and (iv) only
A binding price floor
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.
(i) only
(iii) only
(i) and (iii) only
(ii) and (iv) only
If the government removes a binding price floor from a market, then the price paid by buyers will
increase, 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 increase.
decrease, and the quantity sold in the market will decrease.
When a binding price floor is imposed on a market,
price no longer serves as a rationing device.
the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
only some sellers benefit.
All of the above are correct.
When a binding price floor is imposed on a market,
price no longer serves as a rationing device.
the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor.
all sellers benefit.
All of the above are correct.
A price floor is binding when it is set
above the equilibrium price, causing a shortage.
above the equilibrium price, causing a surplus.
below the equilibrium price, causing a shortage.
below the equilibrium price, causing a surplus.
To say that a price floor is binding is to say that the price floor
results in a shortage.
is set below the equilibrium price.
causes quantity supplied to exceed quantity demanded.
All of the above are correct.
The imposition of a binding price floor on a market
causes quantity demanded to be greater than quantity supplied.
causes quantity demanded to be less than quantity supplied.
causes quantity demanded to be equal to quantity supplied.
causes a decrease in demand.
If a binding price floor is imposed on the video game market, then
the demand for video games will decrease.
the supply of video games will increase.
a surplus of video games will develop.
All of the above are correct.
If a binding price floor is imposed on the video game market, then
the quantity of video games demanded will decrease.
the quantity of video games supplied will increase.
a surplus of video games will develop.
All of the above are correct.
Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the
demand curve for toothpaste shifts to the left.
supply curve for toothpaste shifts to the right.
quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases.
quantity supplied of toothpaste stays the same.
A binding price floor will reduce a firm's total revenue
always.
when demand is elastic.
when demand is inelastic.
never.
Policymakers use taxes
to raise revenue for public purposes but not to influence market outcomes.
both to raise revenue for public purposes and to influence market outcomes.
when they realize that price controls alone are insufficient to correct market inequities.
only in those markets in which the burden of the tax falls clearly on the sellers.
Rent-control laws dictate
the exact rent that landlords must charge tenants.
a maximum rent that landlords may charge tenants.
a minimum rent that landlords may charge tenants.
both a minimum rent and a maximum rent that landlords may charge tenants.
A tax on the sellers of coffee mugs
increases the size of the coffee mug market.
decreases the size of the coffee mug market.
has no effect on the size of the coffee mug market.
may increase, decrease, or have no effect on the size of the coffee mug market.
A tax imposed on the sellers of a good will raise the
price paid by buyers and lower the equilibrium quantity.
price paid by buyers and raise the equilibrium quantity.
effective price received by sellers and lower the equilibrium quantity.
effective price received by sellers and raise the equilibrium quantity.
Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?
The effective price received by sellers is $0.40 per bottle less than it was before the tax.
Sixty percent of the burden of the tax falls on sellers.
This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
All of the above are correct.
In response to a shortage caused by the imposition of a binding price ceiling on a market,
price will no longer be the mechanism that rations scarce resources.
long lines of buyers may develop.
sellers could ration the good or service according to their own personal biases.
All of the above are correct.
