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1. Which of the following is not correct?
a.
Economists have two roles: scientist and policy adviser.
b.
As scientists, economists develop and test theories to explain the world around them.
c.
Economic policies rarely have effects that their architects did not intend or anticipate.
d.
As policy advisers, economists use their theories to help change the world for the better.
2. Which of the following is not an example of a public policy?
a.
rent-control laws
b.
minimum-wage laws
c.
taxes
d.
equilibrium laws
3. Rent-control laws dictate
a.
the exact rent that landlords must charge tenants.
b.
a maximum rent that landlords may charge tenants.
c.
a minimum rent that landlords may charge tenants.
d.
both a minimum rent and a maximum rent that landlords may charge tenants.
4. Minimum-wage laws dictate
a.
the exact wage that firms must pay workers.
b.
a maximum wage that firms may pay workers.
c.
a minimum wage that firms may pay workers.
d.
both a minimum wage and a maximum wage that firms may pay workers.
5. Price controls are usually enacted
a.
as a means of raising revenue for public purposes.
b.
when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
c.
when policymakers tax a good.
d.
All of the above are correct.
6. The presence of a price control in a market for a good or service usually is an indication that
a.
an insufficient quantity of the good or service was being produced in that market to meet the public’s need.
b.
the usual forces of supply and demand were not able to establish an equilibrium price in that market.
c.
policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to
buyers or sellers.
d.
policymakers correctly believed that price controls would generate no inequities of their own once imposed.
7. Price controls
a.
always produce a fair outcome.
b.
always produce an efficient outcome.
c.
can generate inequities of their own.
d.
All of the above are correct.
8. Policymakers use taxes
a.
to raise revenue for public purposes but not to influence market outcomes.
b.
both to raise revenue for public purposes and to influence market outcomes.
c.
when they realize that price controls alone are insufficient to correct market inequities.
d.
only in those markets in which the burden of the tax falls clearly on the sellers.
