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42. Suppose that a television studio has two shows, X and Z, and that tickets for viewing the taping of each show is
free. The equilibrium price for a ticket to view the taping of show X is $25 and the equilibrium price for a ticket to view
the taping of show B is -$20. It is likely that tickets to show ________ will need to be rationed on a first-come-first-
served basis, while the producers of show ________ will have a much more difficult time filling the seats in the studio
since the equilibrium price for tickets to that show is a __________ dollar amount.
a.
Z; X; positive
b.
Z; X; negative
c.
X; Z; positive
d.
X; Z; negative
43. If a college sets its tuition __________ the equilibrium tuition, then it will have to use some form of nonprice-
rationing device to determine who will be accepted for admission to the college.
a.
above
b.
below
c.
equal to
d.
all of the above
Exhibit 5-4
44. Refer to Exhibit 5-4. If tickets for viewing television show tapings are free, for which show will fans most likely have
the longest wait to get tickets?
a.
A
b.
B
c.
C
d.
Wait times for tickets to all shows are equally long.
45. Refer to Exhibit 5-4. If television studio executives choose to charge a price of PB to view the taping of all shows,
they will find that there is a shortage of tickets to view the taping of show ___________ and a surplus of tickets to view
the taping of show ______________.
a.
A; C
b.
C; A
c.
B; A
d.
B; C
46. If the government sets out to make home buying easier for more people by forcing lenders to accept ____________
down payments and ______________ interest rates, the result will likely be a(n) _______________ in housing prices.
a.
lower; lower; increase
b.
higher; higher; increase
c.
lower; higher; decrease
d.
higher; lower; decrease
Exhibit 5-5
47. Refer to Exhibit 5-5. If the airline charges price P2 for both aisle seats and middle seats, the result will be
a.
a surplus of middle seats and the equilibrium quantity of aisle seats.
b.
a surplus of aisle seats and the equilibrium quantity of middle seats.
c.
a shortage of middle seats and the equilibrium quantity of aisle seats.
d.
a shortage of aisle seats and the equilibrium quantity of middle seats.
48. Refer to Exhibit 5-5. If the airline charges price P1 for both aisle seats and middle seats, the result will be
a.
a surplus of middle seats and the equilibrium quantity of aisle seats.
b.
a surplus of aisle seats and the equilibrium quantity of middle seats.
c.
a shortage of middle seats and the equilibrium quantity of aisle seats.
d.
a shortage of aisle seats and the equilibrium quantity of middle seats.
49. Refer to Exhibit 5-5. If the airline charges a price that is between P1 and P2 for both aisle seats and middle seats, the
result will be
a.
a surplus of middle seats and a shortage of aisle seats.
b.
a surplus of aisle seats and a shortage of middle seats.
c.
a shortage of middle seats and the equilibrium quantity of aisle seats.
d.
a shortage of aisle seats and the equilibrium quantity of middle seats.
50. The lower the price of medical care in general, the higher the ____________________________ medical care and the
______________________ specific items that make up medical care (such as x-rays).
a.
quantity demanded of; higher the demand for
b.
demand for; higher the demand for
c.
quantity demanded of; lower the demand for
d.
demand for; higher the quantity demanded of
Exhibit 5-6
51. Refer to Exhibit 5-6. Under law 1 a renter has 30 days to vacate an apartment after being served with an eviction
notice. Under law 2, the renter has 90 days to vacate after being served with an eviction notice. This graph shows that the
supply of apartments is____________ under law 1 than under law 2, and thus apartment rent is _______________ under
law 1 than under law 2.
a.
less; lower
b.
less; higher
c.
greater; lower
d.
greater; higher
52. The higher the price of medical care in general, the lower the ____________________________ medical care and the
______________________ specific items that make up medical care (such as, x-rays).
a.
quantity demanded of; higher the demand for
b.
demand for; higher the demand for
c.
quantity demanded of; lower the demand for
d.
demand for; higher the quantity demanded of
53. The lower the price of medical care in general, the higher the ____________________________ medical care and the
______________________ specific items that make up medical care (such as x-rays). The result will be a
_______________ price for the specific items that make up medical care.
a.
quantity demanded of; higher the demand for; higher
b.
demand for; higher the demand for; higher
c.
quantity demanded of; lower the demand for; lower
d.
demand for; higher the quantity demanded of; higher
54. Profit can be earned by buying _____________ and selling ____________________.
a.
at one price; at the same price
b.
low; high
c.
high: low
d.
none of the above
55. As the price of good Z falls, the quantity demanded of good Z rises, but the quantity supplied of good Z does not
change. Based upon this information we can conclude that the demand curve for good Z is ________________ and the
supply curve for good Z is ________________.
a.
downward sloping; upward sloping
b.
upward sloping; downward sloping
c.
upward sloping; vertical
d.
downward sloping; vertical
e.
vertical; downward sloping
56. The price of good B has a pattern such that P = $20 on Monday through Thursday of every week, and P = $25 on
Fridays. If speculators begin participating in the market for good B, their actions will likely lead to a(n) ______________
in the price of good B on Monday through Thursday and a(n) _______________ in the price of good B on Friday.
a.
increase; increase
b.
increase; decrease
c.
decrease; increase
d.
decrease; decrease
57. The price of good X has a pattern such that P = $3 on Monday through Thursday of every week, and P = $2 on
Fridays. If speculators begin participating in the market for good X, their actions will likely lead to a(n) ______________
in the price of good X on Monday through Thursday and a(n) _______________ in the price of good X on Friday.
a.
increase; increase
b.
increase; decrease
c.
decrease; increase
d.
decrease; decrease
58. Which of the following statements is false?
a.
If Mexican restaurant owners provide free chips and salsa to their customers, the quantity demanded of chips
and salsa will be greater than if customers had to pay for them.
b.
If the price of a good falls, then the demand for its complements will increase.
c.
If the price of a good rises, then the price of its complements will rise.
d.
If chips and salsa are offered for free to Mexican restaurant customers, then restaurants can charge a higher
price for products that are complements to chips and salsa (such as beer).
59. If the price of a good ____________, the demand for its complements will __________.
a.
rises; fall
b.
falls; rise
c.
falls; fall
d.
rises; rise
e.
a and b
60. If new legislation allowed patients to sue their health-maintenance organization (HMO), we would expect the supply
curve for HMO-provided health care to shift to the right and the price of such coverage to fall.
a.
True
b.
False
61. If new legislation allowed patients to sue their health-maintenance organization (HMO), we would expect the supply
curve for HMO-provided health care to shift to the left and the price of such coverage to rise.
a.
True
b.
False
62. People who buy houses in good-weather locations receive this benefit absolutely for free.
a.
True
b.
False
63. The supply curve for space on a freeway is perfectly vertical at any given point in time.
a.
True
b.
False
64. The NCAA rule governing the limits on the amount of a scholarship a college can offer an athlete is an effective price
floor.
a.
True
b.
False
65. If the quantity demanded of medical care is higher at a zero price than at some positive price, then it follows that the
demand for those specific items that make up health care will be higher (than it would be if the quantity demanded of
health care were lower).
a.
True
b.
False
66. When universities charge students less than the equilibrium tuition for admission, they have to impose some nonprice-
rationing device.
a.
True
b.
False
67. The existence of a third party in the medical care market separates the buying of medical care from the paying for
medical care.
a.
True
b.
False
68. High demand for a product does not necessarily mean a high quantity demanded for that product if the price is high
enough.
a.
True
b.
False
69. In a given community, if the government builds more freeways, then the supply curve for freeway space shifts
rightward and the demand curve for freeway space shifts leftward.
a.
True
b.
False
70. If the demand curve for tickets to a taping of a television show intersects the supply curve for tickets to that show at a
negative price, then in order to put that market in equilibrium the producers would need to pay people to view the show
being taped.
a.
True
b.
False
71. The ticket price of zero for the viewing of a television show taping often results in a shortage of tickets which are
frequently rationed on a first-come-first-served basis.
a.
True
b.
False
72. If the supply of aisle seats and middle seats on an airplane is the same, but the demand for aisle seats is greater than
the demand for middle seats, then the equilibrium price of aisle seats will be less than the equilibrium price of middle
seats.
a.
True
b.
False
73. When the government enacts policies that lead to lower mortgage lending standards and lower interest rates, their
actions can indirectly lead to higher home prices.
a.
True
b.
False
74. Economists perceive a college applicant’s grade point average and standardized test scores (such as SAT and ACT
scores) to be rationing devices.
a.
True
b.
False
75. The objective of speculators is to buy at one price and sell at a lower price.
a.
True
b.
False
76. The price of a given good is likely to be less variable with speculators than it would be without speculators.
a.
True
b.
False
77. The actions of speculators make the speculators better off, but they necessarily make the rest of society worse off.
a.
True
b.
False
78. When the price of a good rises, the demand for its complements will tend to rise.
a.
True
b.
False
79. Explain in detail how the legalization of marijuana would be expected to impact the supply, demand, equilibrium price
and quantity for marijuana.
80. Discuss three possible solutions for reducing traffic congestion on freeways. Be sure to explain what effect each
would have on the supply and/or demand for freeway space.
81. Using supply and demand analysis, explain why there is sometimes a surplus of seats to watch a television show being
taped and other times there is a shortage of such seats. Assume that tickets to view the taping of a television show are free
of charge.
82. As discussed in the textbook, describe some policy changes the government could make in order to make it easier for
people to buy houses. Using supply and demand analysis, explain how these policy changes could indirectly lead to fewer
people being able to afford to purchase a home.
83. Using proper economic terminology, describe why Mexican restaurants often provide chips and salsa for free to their
customers.
