Question 1

Which of the following is true?

Accepted Answer

A)  ​It is possible to eliminate a surplus by raising a price floor sufficiently.
B)  ​It is possible to create a surplus by raising a price ceiling sufficiently.
C)  ​It is possible to eliminate a shortage by raising a price ceiling sufficiently.
D)  ​It is possible to create a shortage by lowering a price floor sufficiently.E) A) and B)
F) A) and C)

Question 2

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

A)  ​increase, and the quantity exchanged will increase.
B)  ​increase, and the quantity exchanged will decrease.
C)  ​decrease, and the quantity exchanged will increase.
D)  ​decrease, and the quantity exchanged will decrease.E) A) and D)
F) A) and C)

Question 3

Beach resorts raise their prices during the summer months and yet more people book rooms at those times. Is this a violation of the law of demand?

Accepted Answer

​No. During summer months, the demand fo...

Question 4

Exhibit 5-1
​  ​
​
-Refer to Exhibit 5-1. A price ceiling set at $15 would cause a shortage of 10 units.

Accepted Answer

A) True 
 B)False

Question 5

Assuming that the demand for a good has decreased and the supply of a good has increased by the same amount, then:

Accepted Answer

A)  ​The change in price is determinate but the change in quantity is indeterminate.
B)  ​The change in quantity is determinate but the change in price is indeterminate.
C)  ​Neither the change in price nor the change in quantity will be indeterminate.
D)  ​Both the change in price and the change in quantity will be indeterminate.E) C) and D)
F) All of the above

Question 6

If the government removes a binding price floor from a market, then the price paid by buyers will

Accepted Answer

A)  ​increase, and the quantity exchanged will increase.
B)  ​increase, and the quantity exchanged will decrease.
C)  ​decrease, and the quantity exchanged will increase.
D)  ​decrease, and the quantity exchanged will decrease.E) A) and C)
F) All of the above

Question 7

An increase in the price of a close substitute for good A will:

Accepted Answer

A)  ​increase demand, increase price and increase the quantity exchanged.
B)  ​increase demand, increase price and decrease the quantity exchanged.
C)  ​increase supply, increase price and increase the quantity exchanged.
D)  ​decrease demand, decrease price and decrease the quantity exchanged.E) A) and B)
F) A) and C)

Question 8

A price floor will be binding only if it is set

Accepted Answer

A)  ​equal to the equilibrium price.
B)  ​above the equilibrium price.
C)  ​below the equilibrium price.
D)  ​either above or below the equilibrium price.E) A) and B)
F) A) and D)

Question 9

Exhibit 5-2
​
The diagram below represents the market for butter. 
-Refer to Exhibit 5-2. If a price floor of $4 is imposed, ____ units of butter will be purchased.

Accepted Answer

A)  7,000
B)  ​5,000
C)  ​4,000
D)  ​3,000E) A) and D)
F) A) and C)

Question 10

An increase in demand for a product and a reduction in the costs of production would:

Accepted Answer

A)  ​increase the equilibrium quantity and increase the equilibrium price.
B)  ​increase the equilibrium quantity and decrease the equilibrium price.
C)  ​increase the equilibrium quantity and cause an indeterminate change in the equilibrium price.
D)  ​decrease the equilibrium quantity and cause an indeterminate change in the equilibrium price.E) A) and B)
F) A) and C)

Question 11

When the demand for grapes increases and the supply of grapes decreases at the same time, we can predict that the:

Accepted Answer

A)  ​price of grapes will fall.
B)  ​price of grapes will rise.
C)  ​quantity of grapes exchanged will fall.
D)  ​quantity of grapes exchanged will rise.E) None of the above
F) All of the above

Question 12

A price ceiling will be binding only if it is set

Accepted Answer

A)  ​equal to the equilibrium price.
B)  ​above the equilibrium price.
C)  ​below the equilibrium price.
D)  ​either above or below the equilibrium price.E) All of the above
F) C) and D)

Question 13

Exhibit 5-4
​ 
-Refer to Exhibit 5-4. The movement from ____ is consistent with an increase in supply​

Accepted Answer

A)  ​Point B to Point D
B)  ​Point D to Point B
C)  ​Point D to Point C
D)  ​Point C to Point DE) B) and C)
F) A) and D)

Question 14

Assuming that the demand and supply of a good both decreased by the same amount, the new equilibrium would represent:

Accepted Answer

A)  ​an increase in price and an increase in quantity exchanged.
B)  ​no change in price and an increase in quantity exchanged.
C)  ​a decrease in price and a decrease in quantity exchanged.
D)  ​no change in price, and decrease in quantity exchanged.E) B) and D)
F) A) and C)

Question 15

The imposition of a binding price ceiling on a market often results in:

Accepted Answer

A)  ​an increase in investment in the industry.
B)  ​a surplus.
C)  ​a shortage.
D)  ​a decrease in discrimination on the part of sellers.E) A) and D)
F) None of the above

Question 16

If a price ceiling is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 17

If the prices of productive substitute goods decreased and productive technology improved at the same time, as a result:

Accepted Answer

A)  ​prices would rise and there would be and an indeterminate effect on quantities exchanged.
B)  ​prices would fall and there would be and an indeterminate effect on quantities exchanged.
C)  ​prices would rise and larger quantities would be exchanged.
D)  ​prices would fall and larger quantities would be exchanged.E) A) and B)
F) B) and C)

Question 18

A surplus exists in the market for Barbie dolls at the prevailing price. The surplus will be eliminated by a price:

Accepted Answer

A)  ​increase, decreasing the supply and increasing the demand.
B)  ​decrease, decreasing the supply and increasing the demand.
C)  ​decrease, increasing the quantity supplied and increasing the quantity demanded.
D)  ​decrease, decreasing the quantity supplied and increasing the quantity demanded.E) B) and C)
F) C) and D)

Question 19

Ceteris paribus, if negotiations lead to lower wages for airline employees, what will be the result in the market for air travel?

Accepted Answer

A)  ​an increase in equilibrium price and an increase in equilibrium quantity
B)  ​an increase in equilibrium price and a decrease in equilibrium quantity
C)  ​a decrease in equilibrium price and an increase in equilibrium quantity
D)  ​a decrease in equilibrium price and a decrease in equilibrium quantityE) None of the above
F) A) and D)

Question 20

​Exhibit 5-6 0 and S0, a movement from ____ is consistent with an increase in both demand and supply. A) ​Point A to Point I B) ​Point A to Point C C) ​Point A to Point F D) ​Point A to Point E" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 5-6. Starting with initial demand curves D0 and S0, a movement from ____ is consistent with an increase in both demand and supply.

Accepted Answer

A)  ​Point A to Point I
B)  ​Point A to Point C
C)  ​Point A to Point F
D)  ​Point A to Point EE) All of the above
F) C) and D)

Exam 5: Market in Motion and Price Controls

​Exhibit 5-6 -Refer to Exhibit 5-6. Starting with initial demand curves D0 and S0, a movement from ____ is consistent with an increase in both demand and supply.

Correct AnswerverifiedShow Answer

A surplus exists in the market for Barbie dolls at the prevailing price. The surplus will be eliminated by a price:

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If the government removes a binding price floor from a market, then the price paid by buyers will

Correct AnswerverifiedShow Answer

If a price ceiling is not binding, then it will have no effect on the market.

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A price floor will be binding only if it is set

Correct AnswerverifiedShow Answer

Beach resorts raise their prices during the summer months and yet more people book rooms at those times. Is this a violation of the law of demand?

Correct Answerverified​No. During summer months, the demand fo...View AnswerShow Answer

The imposition of a binding price ceiling on a market often results in:

Correct AnswerverifiedShow Answer

Assuming that the demand for a good has decreased and the supply of a good has increased by the same amount, then:

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When the demand for grapes increases and the supply of grapes decreases at the same time, we can predict that the:

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A price ceiling will be binding only if it is set

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Which of the following is true?

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Assuming that the demand and supply of a good both decreased by the same amount, the new equilibrium would represent:

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Exhibit 5-4 ​ -Refer to Exhibit 5-4. The movement from ____ is consistent with an increase in supply​

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Ceteris paribus, if negotiations lead to lower wages for airline employees, what will be the result in the market for air travel?

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If the prices of productive substitute goods decreased and productive technology improved at the same time, as a result:

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Exhibit 5-2 ​ The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price floor of $4 is imposed, ____ units of butter will be purchased.

Correct AnswerverifiedShow Answer

An increase in the price of a close substitute for good A will:

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Exhibit 5-1 ​ ​ ​ -Refer to Exhibit 5-1. A price ceiling set at $15 would cause a shortage of 10 units.

Correct AnswerverifiedShow Answer

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Correct AnswerverifiedShow Answer

An increase in demand for a product and a reduction in the costs of production would:

Correct AnswerverifiedShow Answer

Exhibit 5-6 -Refer to Exhibit 5-6. Starting with initial demand curves D₀ and S₀, a movement from ____ is consistent with an increase in both demand and supply.

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No. During summer months, the demand fo...
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Exhibit 5-4 -Refer to Exhibit 5-4. The movement from ____ is consistent with an increase in supply

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Exhibit 5-2 The diagram below represents the market for butter. -Refer to Exhibit 5-2. If a price floor of $4 is imposed, ____ units of butter will be purchased.

Correct Answer
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Exhibit 5-1 -Refer to Exhibit 5-1. A price ceiling set at $15 would cause a shortage of 10 units.

Correct Answer
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