Economics Chapter 5 Multiple Choice Table Market For Apartments Reference

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Test Canvas : TestBanks Chapter 05: Price Controls and Quotas: Meddling w ith

Markets

Microeconom ics, 3e

Test Canvas: TestBanks Chapter 05: Price Controls and Quotas:

Meddling with Markets

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1. True/False: Price controls are always set below t...

Question Price controls are always set below the market equilibrium price.

2. True/False: Suppose Congress imposes a price ceil...

Question Suppose Congress imposes a price ceiling of $5 per ATM transaction. If the

average market-clearing price for an ATM transaction is $2, the price ceiling will not

be binding in this instance.

3. True/False: A rent ceiling must be set above the …

Question A rent ceiling must be set above the equilibrium rent to be binding.

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4. True/False: A price ceiling benefits all consumers.

Question A price ceiling benefits all consumers.

5. True/False: Critics of the pharmaceutical industr…

Question Critics of the pharmaceutical industry often argue that price ceilings should be

imposed on the drug manufacturers. If this happened, the quality of drugs would

improve.

6. True/False: Suppose the state of Mississippi crea...

Question Suppose the state of Mississippi creates a price floor in the market for cotton. If

the floor is set below the current market-clearing price for cotton, the floor will

cause a surplus of cotton.

7. True/False: To dispose of the unwanted surplus re...

Question To dispose of the unwanted surplus resulting from agricultural price floors, the

European Union pays exporters to sell products at a loss overseas.

8. True/False: A binding minimum wage will generally...

Question A binding minimum wage will generally cause increased unemployment for low–

skilled workers.

9. True/False: If the state of Minnesota established...

Question If the state of Minnesota established a price floor in the market for pumpkins that

was double the current market-clearing price, this would lead to an inefficient

number of pumpkin farmers in Minnesota.

Points: 0

10. True/False: When transatlantic airfares were set ...

Question When transatlantic airfares were set artificially high by an international treaty,

airlines offered customers an inefficiently high quality of service.

11. True/False: The National Football League does not...

Question The National Football League does not have a licensing process for quarterbacks.

This means that the free market determines the standards that an aspiring

quarterback must achieve.

12. True/False: The demand price of a given quantity …

Question The demand price of a given quantity of doughnuts is the price at which consumers

will demand that quantity of doughnuts. The supply price of donuts is the price at

which donut producers will supply that quantity of doughnuts.

13. True/False: The American Medical Association has ...

Question The American Medical Association has a licensing process for people who aspire

to become doctors. This licensing process has probably led to lower earnings for

doctors over time.

14. Multiple Choice: A price control is:

Question A price control is:

Answer when a firm controls the price of the good it produces.

15. Multiple Choice: A binding price ceiling is designed to:

Question A binding price ceiling is designed to:

Points: 0

16. Multiple Choice: Rapidly increasing health costs have ...

Question Rapidly increasing health costs have been a major political concern since at least

1992. Suppose the government sets the maximum price for a normal doctor’s visit

at $20 to control rising health costs but the current market price is $40. What will

happen?

17. Multiple Choice: The government decides to impose a pr...

Question The government decides to impose a price ceiling on a good because it thinks the

market-determined price is “too high.” If the government imposes the price ceiling

below the equilibrium price:

18. Multiple Choice: The government imposes a price ceilin...

Question The government imposes a price ceiling below the equilibrium price. The price

ceiling will cause:

Answer demand to decrease.

Points: 0

19. Multiple Choice: The NFL wants to give the “comm…

Question The NFL wants to give the “common fan” the opportunity to attend the Super Bowl,

so it sets Super Bowl prices “low”—tickets for a regular seat at Super Bowl XXXVII

cost just $400. Scalpers, however, sell tickets for $1,500 or more. If there are no

transaction costs to selling a ticket, the true cost of a regular ticket to Super Bowl

XXXVII is:

Answer at most $400.

20. Multiple Choice: Rent controls set a price ceiling bel…

Question Rent controls set a price ceiling below the equilibrium price and therefore:

Answer quantity supplied exceeds the quantity demanded.

21. Multiple Choice: A price ceiling will have no effect if:

Question A price ceiling will have no effect if:

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22. Multiple Choice: Reference: Ref 5-1 (Table: The Marke...

Question

Reference: Ref 5-1

(Table: The Market for Soda) Look at the table The Market for Soda. If the

government does not impose a price control, the price of a can of soda will equal:

Answer $0.50.

23. Multiple Choice: Reference: Ref 5-1 (Table: The Marke...

Question

Reference: Ref 5-1

(Table: The Market for Soda) Look at the table The Market for Soda. If the

government imposes a price ceiling of $0.50 per can of soda, the quantity of soda

demanded will be:

Points: 0

24. Multiple Choice: Reference: Ref 5-1 (Table: The Marke...

Question

Reference: Ref 5-1

(Table: The Market for Soda) Look at the table The Market for Soda. If the

government imposes a price ceiling of $0.50 per can of soda, there will be:

Answer a shortage of 2 cans.

25. Multiple Choice: Reference: Ref 5-1 (Table: The Marke...

Question

Reference: Ref 5-1

(Table: The Market for Soda) Look at the table The Market for Soda. If the

government imposes a price ceiling of $1.00 per can of soda, the quantity of soda

supplied will be:

Answer 7 cans.

Points: 0

26. Multiple Choice: Reference: Ref 5-1 (Table: The Marke...

Question

Reference: Ref 5-1

(Table: The Market for Soda) Look at the table The Market for Soda. If the

government imposes a price ceiling of $1.00 per can of soda, the quantity of soda

demanded will be:

Answer 10 cans.

27. Multiple Choice: Reference: Ref 5-2 (Table: Market fo…

Question

Reference: Ref 5-2

(Table: Market for Fried Twinkies) Look at the table The Market for Fried Twinkies.

In response to popular anger over the high price of fried Twinkies and the extreme

wealth of fried Twinkie producers, the government imposes a price ceiling of $1.20

per fried Twinkie. From this table, the price ceiling causes:

Points: 0

a surplus of 3,000 fried Twinkies.

28. Multiple Choice: Table: Market for Apartments Referenc…

Question Table: Market for Apartments

Reference: Ref 5-3

(Table: Market for Apartments) Look at the table Market for Apartments. If a

government price ceiling of $700 is imposed on this market, an inefficiency will

result in the form of a:

Answer surplus of 0.6 million apartments.

29. Multiple Choice: Table: Market for Apartments Referenc…

Question

Points: 0

Table: Market for Apartments

Reference: Ref 5-3

(Table: Market for Apartments) Look at the table Market for Apartments. If a

government price ceiling of $900 is imposed on this market, an inefficiency will

result in the form of a:

Answer surplus of 0.6 million apartments.

30. Multiple Choice: Table: Market for Apartments Referenc…

Question Table: Market for Apartments

Reference: Ref 5-3

(Table: Market for Apartments) Look at the table Market for Apartments. If a

government price ceiling of $600 is imposed on this market, an inefficiency will

result in the form of a:

Answer surplus of 0.6 million apartments.

Points: 0

31. Multiple Choice: Suppose the Jamaican government sets …

Question Suppose the Jamaican government sets coffee prices at $1 per pound, when the

market price is $10. The government‘s actions will:

Answer improve efficiency, since the low prices will force producers to find cheaper

production methods.

32. Multiple Choice: Suppose that the average cost of a do…

Question Suppose that the average cost of a doctor‘s visit is $100. If the government

imposes a price ceiling of $50 on the cost of a doctor‘s visit, there will be:

Answer an excess supply of doctor‘s visits.

33. Multiple Choice: If the government feels that a price ...

Question If the government feels that a price in the market is too high for ________, it can

impose a ________.

producers; price floor

Points: 0

34. Multiple Choice: The government decides to impose a pr...

Question The government decides to impose a price ceiling on a good because it thinks the

market-determined price is “too high.” If it imposes the price ceiling above the

equilibrium price:

Answer consumers will respond to the higher price and therefore wish to purchase less

of the good than at the equilibrium price.

35. Multiple Choice: The market for apples is in equilibri…

Question The market for apples is in equilibrium at a price of $0.50 per pound. If the

government imposes a price ceiling in the market at a price of $0.40 per pound,

then:

Answer quantity demanded will decrease.

36. Multiple Choice: To be binding, a price ceiling must b…

Question To be binding, a price ceiling must be set at a price:

any price ceiling is binding.

37. Multiple Choice: A maximum price set below the equilib…

Question A maximum price set below the equilibrium price is a:

Answer demand price.

Points: 0

38. Multiple Choice: A price ceiling is:

Question A price ceiling is:

the deadweight loss caused by an inefficiently low quantity.

39. Multiple Choice: Figure: Price Control Reference: Ref ...

Question Figure: Price Control

Reference: Ref 5-4

(Figure: Price Control) Look at the figure Price Control. In the graph, one effective

price ceiling would be the price indicated at point________ and a ________ would

exist equal to the difference between points ________.

Answer b; surplus; f and e

Points: 0

40. Multiple Choice: The dictator of a small country restr…

Question The dictator of a small country restricts the price of cars to an amount less than or

equivalent to $1,200 (a price below the equilibrium price for cars). Such a policy

would be an example of a:

Answer price floor.

41. Multiple Choice: A student organization is formed on y…

Question A student organization is formed on your college campus to protest against the

high rent prices for apartments near campus. This organization is planning a

meeting with the dean and president of the college. Which of the following best

describes the policy the student organization will fight for?

Answer a laissez faire policy

42. Multiple Choice: Hugo Chávez is the president o…

Question Hugo Chávez is the president of Venezuela. Venezuela is a major producer of oil

products, which remain the keystone of Venezuela’s economy. Suppose President

Chávez wants to increase his popularity with the citizens of Venezuela and enacts

a government policy that reduces the customer price of gasoline sold at state-

owned gas stations to 50% of the previous price. This policy is called a:

Answer price control.

43. Multiple Choice: Hugo Chávez is the president o…

Points: 0

Question Hugo Chávez is the president of Venezuela. Venezuela is a major producer of oil

products, which remain the keystone of Venezuela’s economy. Suppose President

Chávez enacts a government policy that reduces the customer price of gasoline

sold at state-owned gas stations to 50% of the previous price. In theory, this policy

will result in the quantity of gasoline demanded to be ________ the quantity of

gasoline supplied.

Answer equal to

44. Multiple Choice: Figure: The Market for Hybrid Cars Re…

Question Figure: The Market for Hybrid Cars

Reference: Ref 5-5

(Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars.

If there were a binding price ceiling in the market for hybrid cars, one possible price

would be equal to ________, consumers would demand ________, and producers

would supply ________.

Answer P1; Q1; Q3

45. Multiple Choice: Figure: The Market for Economics Text...

Points: 0

Question Figure: The Market for Economics Textbooks

Reference: Ref 5-6

(Figure: The Market for Economics Textbooks) Look at the figure The Market for

Economics Textbooks. Suppose the government believes textbooks are too

expensive and it wants to make sure textbooks are affordable to more students.

This type of price control is called a ________ and one possible price binding price

control would be ________.

Answer price floor; $100

46. Multiple Choice: Figure: The Market for Economics Text...

Question

Points: 0

Figure: The Market for Economics Textbooks

Reference: Ref 5-6

(Figure: The Market for Economics Textbooks) Look at the figure The Market for

Economics Textbooks. At a price ceiling of $40 in the market, the market outcome

would be:

Answer a surplus of 30 textbooks.

47. Multiple Choice: When price controls take the form of ...

Question When price controls take the form of maximum prices set below the equilibrium

price, they are:

Answer illegal.

48. Multiple Choice: A maximum price legislated by the gov…

Points: 0

Question A maximum price legislated by the government is called:

Answer a price support.

49. Multiple Choice: A persistent shortage may occur if:

Question A persistent shortage may occur if:

supply shifts rightward.

50. Multiple Choice: If the government sets out to help lo…

Question If the government sets out to help low-income people by establishing a maximum

amount that can be paid for rent:

Answer a price floor has been set and a shortage of rental units may occur.

51. Multiple Choice: Rent controls usually set a price cei...

Question Rent controls usually set a price ceiling below the equilibrium price and therefore:

Answer quantity supplied exceeds the quantity demanded.

Points: 0

52. Multiple Choice: A price ceiling is not effective if:

Question A price ceiling is not effective if:

it creates a shortage.

53. Multiple Choice: Reference: Ref 5-7 (Table: Market fo…

Question

Reference: Ref 5-7

(Table: Market for Butter) Look at the table Market for Butter. If the government

imposes a price ceiling of $0.90 per pound of butter, the quantity of butter actually

purchased will be:

Answer 10.5 million pounds.

54. Multiple Choice: Figure: Supply and Demand Reference: ...

Question

Points: 0

Figure: Supply and Demand

Reference: Ref 5-8

(Figure: Supply and Demand) Look at the figure Supply and Demand. In the market

shown in the figure, a price ceiling of P1 causes:

Answer a shortage equal to the distance AB.

55. Multiple Choice: Figure: Supply and Demand Reference: ...

Question Figure: Supply and Demand

Reference: Ref 5-8

(Figure: Supply and Demand) Look at the figure Supply and Demand. In the market

shown in the figure, a price ceiling of P3 causes:

Answer a shortage equal to the distance AB.

Points: 0