Supply, Demand, and Government Policies 1415
33.
When a binding price ceiling is imposed on a market to benefit buyers,
a.
every buyer in the market benefits.
b.
every buyer and seller in the market benefits.
c.
every buyer who wants to buy the good will be able to do so, but only if he waits in long lines.
d.
some buyers will not be able to buy any amount of the good.
34.
In response to a shortage caused by the imposition of a binding price ceiling on a market,
a.
price will no longer be the mechanism that rations scarce resources.
b.
long lines of buyers may develop.
c.
sellers could ration the good or service according to their own personal biases.
d.
All of the above are correct.
1416 Supply, Demand, and Government Policies
Figure 6-1
Panel (a) Panel (b)
35.
Refer to Figure 6-1. A binding price ceiling is shown in
a.
panel (a) only.
b.
panel (b) only.
c.
both panel (a) and panel (b).
d.
neither panel (a) nor panel (b).
36.
Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good
at the price ceiling?
a.
panel (a) only
b.
panel (b) only
c.
both panel (a) and panel (b)
d.
neither panel (a) nor panel (b)
37.
Refer to Figure 6-1. The price ceiling shown in panel (a)
a.
is not binding.
b.
creates a surplus.
c.
creates a shortage.
d.
Both a) and b) are correct.
38.
Refer to Figure 6-1. The price ceiling shown in panel (b)
a.
is not binding.
b.
creates a surplus.
c.
creates a shortage.
d.
Both a) and b) are correct.
Figure 6-2
39.
Refer to Figure 6-2. The price ceiling
a.
is binding.
b.
causes a shortage.
c.
causes the quantity demanded to exceed the quantity supplied.
d.
All of the above are correct.
40.
Refer to Figure 6-2. The price ceiling
a.
causes a shortage of 45 units of the good.
b.
makes it necessary for sellers to ration the good.
c.
is not binding because it is set below the equilibrium price.
d.
causes a shortage of 40 units of the good.
41.
Refer to Figure 6-2. The price ceiling
a.
causes a shortage of 40 units.
b.
is not binding, because it is set above the equilibrium price.
c.
causes a shortage of 45 units.
d.
causes a shortage of 85 units.
42.
Refer to Figure 6-2. The price ceiling causes quantity
a.
supplied to exceed quantity demanded by 45 units.
b.
supplied to exceed quantity demanded by 85 units.
c.
demanded to exceed quantity supplied by 45 units.
d.
demanded to exceed quantity supplied by 85 units.
43.
A legal minimum on the price at which a good can be sold is called a
a.
price subsidy.
b.
price floor.
c.
tax.
d.
price ceiling.
44.
A price floor is
a.
a legal minimum on the price at which a good can be sold.
b.
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 floor.
c.
a source of inefficiency in a market.
d.
All of the above are correct.
45.
Which of the following is the most likely explanation for the imposition of a price floor on the
market for corn?
a.
Policymakers have studied the effects of the price floor carefully, and they recognize that the
price floor is
advantageous for society as a whole.
b.
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.
c.
Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers
into imposing
the price floor.
d.
Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers
into imposing
the price floor.
46.
If a price floor is not binding, then
a.
the equilibrium price is above the price floor.
b.
the equilibrium price is below the price floor.
c.
there will be a surplus in the market.
d.
there will be a shortage in the market.
47.
If a price floor is not binding, then
a.
there will be a surplus in the market.
b.
there will be a shortage in the market.
c.
there will be no effect on the market price or quantity sold.
d.
the market will be less efficient than it would be without the price floor.
48.
If a nonbinding price floor is imposed on a market, then the
a.
quantity sold in the market will decrease.
b.
quantity sold in the market will stay the same.
c.
price in the market will increase.
d.
price in the market will decrease.
49.
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.
a.
(i) only
b.
(iii) only
c.
(i) and (iii) only
d.
(ii) and (iv) only
50.
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.
a.
(iii) only
b.
(iv) only
c.
(i) and (iii) only
d.
(ii) and (iv) only
51.
A price floor will be binding only if it is set
a.
equal to the equilibrium price.
b.
above the equilibrium price.
c.
below the equilibrium price.
d.
either above or below the equilibrium price.
52.
After a binding price floor becomes effective, a
a.
smaller quantity of the good is bought and sold.
b.
a larger quantity of the good is demanded.
c.
a smaller quantity of the good is supplied.
d.
All of the above are correct.
53.
Which of the following observations would be consistent with the imposition of a binding price
floor on a market?
After the price floor becomes effective,
a.
a smaller quantity of the good is bought and sold.
b.
a larger quantity of the good is demanded.
c.
a smaller quantity of the good is supplied.
d.
the price falls below the equilibrium price.
54.
Suppose the government has imposed a price floor on the market for soybeans. Which of the
following events could
transform the price floor from one that is not binding into one that is
binding?
a.
Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.
b.
The number of farmers selling soybeans decreases.
c.
Consumers‘ income increases, and soybeans are a normal good.
d.
The number of consumers buying soybeans increases.
55.
Suppose the government has imposed a price floor on cellular phones. Which of the
following events could
transform the price floor from one that is binding to one that is
not binding?
a.
Cellular phones become less popular.
b.
Traditional land line phones become more expensive.
c.
The components used to produce cellular phones become less expensive.
d.
Firms expect the price of cellular phones to fall in the future.
56.
If the government removes a binding price floor from a market, then the price paid by buyers will
a.
increase, and the quantity sold in the market will increase.
b.
increase, and the quantity sold in the market will decrease.
c.
decrease, and the quantity sold in the market will increase.
d.
decrease, and the quantity sold in the market will decrease.
57.
If the government removes a binding price floor from a market, then the price received by sellers
will
a.
decrease, and the quantity sold in the market will decrease.
b.
decrease, and the quantity sold in the market will increase.
c.
increase, and the quantity sold in the market will decrease.
d.
increase, and the quantity sold in the market will increase.
58.
When a binding price floor is imposed on a market,
a.
price no longer serves as a rationing device.
b.
the quantity supplied at the price floor exceeds the quantity that would have been supplied
without the price
floor.
c.
only some sellers benefit.
d.
All of the above are correct.
59.
When a binding price floor is imposed on a market,
a.
price no longer serves as a rationing device.
b.
the quantity demanded at the price floor exceeds the quantity that would have been
demanded without the
price floor.
c.
all sellers benefit.
d.
All of the above are correct.
60.
When a binding price floor is imposed on a market to benefit sellers,
a.
no sellers actually benefit.
b.
some sellers benefit, but no sellers are harmed.
c.
some sellers benefit, and some sellers are harmed.
d.
all sellers benefit.
61.
A price floor is binding when it is set
a.
above the equilibrium price, causing a shortage.
b.
above the equilibrium price, causing a surplus.
c.
below the equilibrium price, causing a shortage.
d.
below the equilibrium price, causing a surplus.
62.
To say that a price floor is binding is to say that the price floor
a.
results in a shortage.
b.
is set below the equilibrium price.
c.
causes quantity supplied to exceed quantity demanded.
d.
All of the above are correct.
63.
A surplus results when a
a.
nonbinding price floor is imposed on a market.
b.
nonbinding price floor is removed from a market.
c.
binding price floor is imposed on a market.
d.
binding price floor is removed from a market.
64.
The imposition of a binding price floor on a market
a.
causes quantity demanded to be greater than quantity supplied.
b.
causes quantity demanded to be less than quantity supplied.
c.
causes quantity demanded to be equal to quantity supplied.
d.
causes a decrease in demand.
65.
If a price floor is a binding constraint on a market, then
a.
the equilibrium price must be above the price floor.
b.
the quantity demanded must exceed the quantity supplied.
c.
sellers cannot sell all they want to sell at the price floor.
d.
buyers cannot buy all they want to buy at the price floor.
66.
If a binding price floor is imposed on the video game
market, then
a.
the demand for video games will decrease.
b.
the supply of video games will increase.
c.
a surplus of video games will develop.
d.
All of the above are correct.
67.
If a binding price floor is imposed on the video game market, then
a.
the quantity of video games demanded will decrease.
b.
the quantity of video games supplied will increase.
c.
a surplus of video games will develop.
d.
All of the above are correct.
68.
If a binding price floor is imposed on the market for eBooks, then
a.
the demand for eBooks will decrease.
b.
the supply of eBooks will increase.
c.
a surplus of eBooks will develop.
d.
All of the above are correct.
69.
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
a.
demand curve for toothpaste shifts to the left.
b.
supply curve for toothpaste shifts to the right.
c.
quantity demanded of toothpaste decreases, and the quantity of toothpaste that
firms want to supply
increases.
d.
quantity supplied of toothpaste stays the same.
70.
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,
a.
quantity demanded decreases.
b.
quantity supplied increases.
c.
there is a surplus.
d.
All of the above are correct.