Supply, Demand, and Government Policies 1495
168.
Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market.
What will be the size of
the shortage in this market?
a.
0 units
b.
30 units
c.
45 units
d.
75 units
169.
Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market.
What will be the size of
the surplus (or shortage) in this market?
a.
0 units
b.
30 units
c.
45 units
d.
75 units
170.
In the United States, before OPEC increased the price of crude oil in 1973, there was
a.
no price ceiling on gasoline.
b.
a nonbinding price ceiling on gasoline.
c.
a binding price ceiling on gasoline.
d.
a nonbinding price floor on gasoline.
171.
In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that
a.
OPEC raised the price of crude oil in world markets.
b.
U.S. gasoline producers raised the price of gasoline.
c.
the U.S. government maintained a price ceiling on gasoline.
d.
Americans typically commuted long distances.
172.
Economists blame the long lines at gasoline stations in the U.S. in the 1970s on
a.
U.S. government regulations pertaining to the price of gasoline.
b.
the Organization of Petroleum Exporting Countries (OPEC).
c.
major oil companies operating in the U.S.
d.
consumers who bought gasoline frequently, even when their cars‘ gasoline tanks were nearly
full.
173.
When OPEC raised the price of crude oil in the 1970s, it caused the
a.
demand for gasoline to increase.
b.
demand for gasoline to decrease.
c.
supply of gasoline to increase.
d.
supply of gasoline to decrease.
174.
When OPEC raised the price of crude oil in the 1970s, it caused the
a.
supply of gasoline to decrease.
b.
quantity of gasoline demanded to decrease.
c.
equilibrium price of gasoline to increase.
d.
All of the above are correct.
175.
When OPEC raised the price of crude oil in the 1970s, it caused the United States’
a.
nonbinding price floor on gasoline to become binding.
b.
binding price floor on gasoline to become nonbinding.
c.
nonbinding price ceiling on gasoline to become binding.
d.
binding price ceiling on gasoline to become nonbinding.
176.
Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on
a.
a sharp increase in the demand for gasoline that was brought on by the Vietnam War.
b.
the government’s policy of maintaining a price ceiling on gasoline.
c.
an indifference among U.S. consumers toward conservation.
d.
the lack of substitutes for crude oil.
177.
Economists generally believe that rent control is
a.
an efficient and fair way to help the poor.
b.
inefficient but the best available means of solving a serious social problem.
c.
a highly inefficient way to help the poor raise their standard of living.
d.
an efficient way to allocate housing, but not a good way to help the poor.
178.
One economist has argued that rent control is “the best way to destroy a city, other than
bombing.” Why would an
economist say this?
a.
He fears that low rents will cause low-income people to move into the city, reducing
the quality of life for
other people.
b.
He fears that rent control will benefit landlords at the expense of tenants, increasing inequality
in the city.
c.
He fears that rent controls will cause a construction boom, which will make the city
crowded and more
polluted.
d.
He fears that rent control will eliminate the incentive to maintain buildings, leading to a
deterioration of the
city.
179.
Rent control
a.
serves as an example of how a social problem can be alleviated or even solved by government
policies.
b.
serves as an example of a price ceiling.
c.
is regarded by most economists as an efficient way of helping the poor.
d.
is the most efficient way to allocate scarce housing resources.
180.
The goal of rent control is to
a.
facilitate controlled economic experiments in urban areas.
b.
help landlords by assuring them a low vacancy rate for their apartments.
c.
help the poor by assuring them an adequate supply of apartments.
d.
help the poor by making housing more affordable.
181.
Which of the following is not a rationing mechanism used by landlords in cities with rent control?
a.
waiting lists
b.
race
c.
price
d.
bribes
182.
Under rent control, bribery is a mechanism to
a.
bring the total price of an apartment (including the bribe) closer to the equilibrium price.
b.
allocate housing to the poorest individuals in the market.
c.
force the total price of an apartment (including the bribe) to be less than the market price.
d.
allocate housing to the most deserving tenants.
183.
Under rent control, landlords cease to be responsive to tenants’ concerns about the quality of the
housing because
a.
with rent control, the government guarantees landlords a minimum level of profit.
b.
they become resigned to the fact that many of their apartments are going to be vacant at any
given time.
c.
with shortages and waiting lists, they have no incentive to maintain and improve their property.
d.
with rent control, it becomes the government’s responsibility to maintain rental housing.
184.
Under rent control, tenants can expect
a.
lower rent and higher quality housing.
b.
lower rent and lower quality housing.
c.
higher rent and a shortage of rental housing.
d.
higher rent and a surplus of rental housing.
185.
Which of the following is not a result of rent control?
a.
fewer new apartments offered for rent
b.
less maintenance provided by landlords
c.
bribery
d.
higher quality housing
186.
Rent control
a.
is an example of a price ceiling.
b.
leads to a larger shortage of apartments in the long run than in the short run.
c.
leads to lower rents and, in the long run, to lower–quality housing.
d.
All of the above are correct.
187.
In the housing market, supply and demand are
a.
more elastic in the short run than in the long run, and so rent control leads to a larger
shortage of apartments
in the short run than in the long run.
b.
more elastic in the short run than in the long run, and so rent control leads to a larger
shortage of apartments
in the long run than in the short run.
c.
more elastic in the long run than in the short run, and so rent control leads to a larger
shortage of apartments
in the short run than in the long run.
d.
more elastic in the long run than in the short run, and so rent control leads to a larger
shortage of apartments
in the long run than in the short run.
188.
Rent control policies tend to cause
a.
relatively smaller shortages in the short run than in the long run because supply and demand
tends to be more
elastic in the short run than in the long run.
b.
relatively larger shortages in the short run than in the long run because supply and demand
tends to be more
elastic in the short run than in the long run.
c.
relatively larger shortages in the short run than in the long run because supply and demand
tends to be more
inelastic in the short run than in the long run.
d.
relatively smaller shortages in the short run than in the long run because supply and demand
tends to be more
inelastic in the short run than in the long run.
189.
In the short run, rent control causes the quantity supplied
a.
and quantity demanded to fall.
b.
to fall and quantity demanded to rise.
c.
to rise and quantity demanded to fall.
d.
and quantity demanded to rise.
190.
Which of the following is not a short-run effect of rent control on the housing market?
a.
reduced rents
b.
a large shortage
c.
a small increase in quantity demanded
d.
a small decrease in quantity supplied
191.
Over time, housing shortages caused by rent control
a.
increase, because the demand for and supply of housing are less elastic in the long run.
b.
increase, because the demand for and supply of housing are more elastic in the long run.
c.
decrease, because the demand for and supply of housing are less elastic in the long run.
d.
decrease, because the demand for and supply of housing are more elastic in the long run.
192.
Which of the following statements about the effects of rent
control is correct?
a.
The short-run effect of rent control is a surplus of apartments, and the long-run effect of
rent control is a
shortage of apartments.
b.
The short-run effect of rent control is a relatively small shortage of apartments, and the
long-run effect of
rent control is a larger shortage of apartments.
c.
In the long run, rent control leads to a shortage of apartments and an improvement in the
quality of available
apartments.
d.
The effects of rent control are very noticeable to the public in the short run because the
primary effects of
rent control occur very quickly.
193.
The long-run effects of rent controls are a good illustration of the principle that
a.
society faces a short-run tradeoff between unemployment and inflation.
b.
the cost of something is what you give up to get it.
c.
people respond to incentives.
d.
government can sometimes improve on market outcomes.
194.
An alternative to rent-control laws that would not reduce the quantity of housing supplied is
a.
the payment by government of a fraction of a poor family’s rent.
b.
higher taxes on rental income earned by landlords.
c.
a policy that prevents landlords from evicting tenants.
d.
a policy that allows government to confiscate residential property for the purpose of
commercial
development.
195.
Which of the following is correct?
a.
Rent control and the minimum wage are both examples of price ceilings.
b.
Rent control is an example of a price ceiling, and the minimum wage is an example of a price
floor.
c.
Rent control is an example of a price floor, and the minimum wage is an example of a price
ceiling.
d.
Rent control and the minimum wage are both examples of price floors.
196.
Which of the following is not correct? In a 2006 survey of Ph.D. economists,
a.
47 percent favored eliminating the minimum wage.
b.
14 percent would maintain the minimum wage at its current level.
c.
38 percent would increase the minimum wage.
d.
10 percent would decrease the minimum wage.
197.
An example of a price floor is
a.
the regulation of gasoline prices in the U.S. in the 1970s.
b.
rent control.
c.
the minimum wage.
d.
any restriction on price that leads to a shortage.
198.
The minimum wage is an example of a
a.
price ceiling.
b.
price floor.
c.
wage subsidy.
d.
tax.
199.
Minimum-wage laws dictate the
a.
average price employers must pay for labor.
b.
highest price employers may pay for labor.
c.
lowest price employers may pay for labor.
d.
the highest and lowest prices employers may pay for labor.
200.
The U.S. Congress first instituted a
minimum wage in
a. 1776.
b. 1812.
c. 1938.
d. 1975.
201.
The minimum wage was instituted to ensure workers
a.
a middle-class standard of living.
b.
employment.
c.
a minimally adequate standard of living.
d.
unemployment compensation.
202.
In 2012, the U.S. minimum wage according to federal law was
a.
$4.25 per hour.
b.
$5.15 per hour.
c.
$5.75 per hour.
d.
$7.25 per hour.
203.
Which of the following is not correct?
a.
Some states in the U.S. mandate minimum wages above the federal level.
b.
Most European nations have minimum-wage laws.
c.
The U.S. minimum wage is significantly higher than the minimum wages in France and the
United Kingdom.
d.
The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act.
204.
If the minimum wage exceeds the equilibrium wage, then
a.
the quantity demanded of labor will exceed the quantity supplied.
b.
the quantity supplied of labor will exceed the quantity demanded.
c.
the minimum wage will not be binding.
d.
there will be no unemployment.
205.
A minimum wage that is set below a market‘s equilibrium wage will
a.
result in an excess demand for labor, that is, unemployment.
b.
result in an excess demand for labor, that is, a shortage of workers.
c.
result in an excess supply of labor, that is, unemployment.
d.
have no impact on employment.
206.
A binding minimum wage
a.
alters both the quantity demanded and quantity supplied of labor.
b.
affects only the quantity of labor demanded; it does not affect the quantity of labor supplied.
c.
has no effect on the quantity of labor demanded or the quantity of labor supplied.
d.
causes only temporary unemployment because the market will adjust and eliminate any
temporary surplus of
workers.
207.
Which of the following is not correct?
a.
The economy contains many labor markets for different types of workers.
b.
The impact of the minimum wage depends on the skill and experience of the worker.
c.
The minimum wage is binding for workers with high skills and much experience.
d.
The minimum wage is not binding when the equilibrium wage is above the minimum wage.