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Question;51. Which;of the following is not a result of rent control?;a.;fewer new;apartments offered for rent;b.;less;maintenance provided by landlords;c.;bribery;d.;higher;quality housing;52. A;legal minimum on the price at which a good can be sold is called a price;a.;subsidy.;b.;floor.;c.;support.;d.;ceiling.;53. 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.;54. 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.;55. 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.;it has no;legal enforcement mechanism.;d.;More than one;of the above is correct.;56. 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.;57. If;a nonbinding price floor is imposed on a market, then;a.;the quantity;sold in the market will decrease.;b.;the quantity;sold in the market will stay the same.;c.;the price in;the market will increase.;d.;the price in;the market will decrease.;58. 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.;59. 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.;60. 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.;61. A;surplus results when;a.;a nonbinding;price floor is imposed on a market.;b.;a nonbinding;price floor is removed from a market.;c.;a binding;price floor is imposed on a market.;d.;a binding;price floor is removed from a market.;62. The;imposition of a binding price floor on a market causes quantity demanded to be;a.;greater than;quantity supplied.;b.;less than;quantity supplied.;c.;equal to;quantity supplied.;d.;Both (a) and;(b) are possible.;63. 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.;64. Which;of the following observations would be consistent with the imposition of a;binding price floor on a market?;a.;A smaller;quantity of the good is bought and sold after the price floor becomes;effective.;b.;A larger;quantity of the good is demanded after the price floor becomes effective.;c.;A smaller;quantity of the good is supplied after the price floor becomes effective.;d.;All of the;above are correct.;65. 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.;66. 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.;67. Suppose;the equilibrium price of a physical examination ("physical") by a;doctor is $200, and the government imposes a price floor of $250 per;physical. As a result of the price floor;a.;the demand;curve for physicals shifts to the left.;b.;the supply;curve for physicals shifts to the right.;c.;the quantity;demanded of physicals decreases and the quantity of physicals doctors want to;give increases.;d.;the number of;physicals performed stays the same.;68. Suppose;the government has imposed a price floor on televisions. Which of the following events could transform;the price floor from one that is not binding into one that is binding?;a.;Firms expect;the price of televisions to rise in the future.;b.;The number of;firms selling televisions decreases.;c.;Consumers;income decreases, and televisions are a normal good.;d.;The number of;consumers buying televisions increases.;69. 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.;70. 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.;71. 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.;72. 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.;73. When;a binding price floor is imposed on a market to benefit sellers;a.;every seller;in the market benefits.;b.;every buyer;in the market benefits, too.;c.;every seller;who wants to sell the good will be able to do so, but only if they appeal to;the personal biases of the buyers.;d.;some sellers;will not be able to sell any amount of the good.;74. When;a binding price floor is imposed on a market to benefit sellers;a.;no sellers;actually do benefit.;b.;some sellers;benefit, but no sellers are harmed.;c.;some sellers;benefit and some sellers are harmed.;d.;all sellers;benefit.;75. A;binding price floor will reduce a firm's total revenue;a.;always.;b.;when demand;is elastic.;c.;when demand;is inelastic.;d.;never.;76. An;example of a price floor is;a.;the;regulation of gasoline prices in the U.S. in the 1970s.;b.;rent control.;c.;the minimum;wage.;d.;any;restriction on price that leads to a shortage.;77. The;minimum wage is an example of;a.;a price;ceiling.;b.;a price;floor.;c.;a wage;subsidy.;d.;a tax.;78. Which;of the following is correct?;a.;Rent control;and the minimum wage are both examples of price ceilings.;b.;Rent control;is an example of a price ceiling, and the minimum wage is an example of a;price floor.;c.;Rent control;is an example of a price floor, and the minimum wage is an example of a price;ceiling.;d.;Rent control;and the minimum wage are both examples of price floors.;79. Minimum-wage;laws dictate the;a.;average price;employers must pay for labor.;b.;highest price;employers may pay for labor.;c.;lowest price;employers may pay for labor.;d.;the highest;and lowest prices employers may pay for labor.;80. The;U.S.;Congress first instituted a minimum wage in;a.;1776.;b.;1812.;c.;1938.;d.;1975.;81. The;minimum wage was instituted to ensure workers;a.;a;middle-class standard of living.;b.;employment.;c.;a minimally;adequate standard of living.;d.;unemployment;compensation.;82. In;2007, the U.S.;minimum wage according to federal law was;a.;$4.25 per;hour.;b.;$5.15 per;hour.;c.;$5.75 per;hour.;d.;$7.25 per;hour.;83. The;U.S.;minimum wage according to federal law is scheduled to increase to;a.;$5.15 per;hour by 2010.;b.;$5.75 per;hour by 2010.;c.;$7.25 per;hour by 2010.;d.;$10.25 per;hour by 2010.;84. Which;of the following is not correct?;a.;Some states;in the U.S.;mandate minimum wages above the federal level.;b.;Most European;nations have minimum-wage laws.;c.;The U.S. minimum wage is significantly higher than;the minimum wages in France;and the United Kingdom.;d.;The U.S.;Congress first instituted a minimum wage with the Fair Labor Standards Act.;85. Which;of the following is correct?;a.;Workers;determine the supply of labor, and firms determine the demand for labor.;b.;Workers;determine the demand for labor, and firms determine the supply of labor.;c.;The labor;market is a single market for all different types of workers.;d.;The price of;the product produced by labor adjusts to balance the supply of labor and the;demand for labor.;86. If;the minimum wage exceeds the equilibrium wage, then;a.;the quantity;demanded of labor will exceed the quantity supplied.;b.;the quantity;supplied of labor will exceed the quantity demanded.;c.;the minimum;wage will not be binding.;d.;there will be;no unemployment.;87. A;minimum wage that is set above a market's equilibrium wage will result in;a.;an excess;demand for labor, that is, unemployment.;b.;an excess;demand for labor, that is, a shortage of workers.;c.;an excess;supply of labor, that is, unemployment.;d.;an excess;supply of labor, that is, a shortage of workers.;88. A;minimum wage that is set below a market's equilibrium wage will result in;a.;an excess;demand for labor, that is, unemployment.;b.;an excess;demand for labor, that is, a shortage of workers.;c.;an excess;supply of labor, that is, unemployment.;d.;None of the;above is correct.;89. A;binding minimum wage;a.;alters both;the quantity demanded and quantity supplied of labor.;b.;affects only;the quantity of labor demanded, it does not affect the quantity of labor;supplied.;c.;has no effect;on the quantity of labor demanded or the quantity of labor supplied.;d.;causes only;temporary unemployment, since the market will adjust and eliminate any;temporary surplus of workers.;90. The;minimum wage, if it is binding, raises the incomes of;a.;no workers.;b.;only those;workers who cannot find jobs.;c.;only those;workers who have jobs.;d.;all workers.;91. The;minimum wage, if it is binding, lowers the incomes of;a.;no workers.;b.;only those;workers become unemployed.;c.;only those;workers who have jobs.;d.;all workers.;92. Which;of the following is not correct?;a.;The economy;contains many labor markets for different types of workers.;b.;The impact of;the minimum wage depends on the skill and experience of the worker.;c.;The minimum;wage is binding for workers with high skills and much experience.;d.;The minimum;wage is not binding when the equilibrium wage is above the minimum wage.;93. The;minimum wage has its greatest impact on the market for;a.;female labor.;b.;older labor.;c.;black labor.;d.;teenage;labor.;94. The;minimum wage does not apply to;a.;jobs for;teenagers.;b.;jobs for;members of minority groups.;c.;unpaid;internships.;d.;jobs that;include on-the-job training.;95. Studies;of the effects of the minimum wage typically find that a 10 percent increase in;the minimum wage depresses teenage employment by about;a.;0 percent.;b.;1 to 3;percent.;c.;5 to 7;percent.;d.;10 percent.;96. Which;of the following is correct?;a.;Studies of;the effects of the minimum wage typically find that a 10 percent increase in;the minimum wage raises the average wage of teenagers by 10 percent.;b.;The drop in;teenage employment caused by a 10 percent increase in the minimum wage is not;significant.;c.;The minimum;wage is more often binding for teenagers than for other members of the labor;force.;d.;Enforcement;of minimum-wage laws is perfect.;97. Which;of the following is notcorrect?;a.;In a 2006;survey of Ph.D. economists, 47 percent favored eliminating the minimum wage.;b.;In a 2006;survey of Ph.D. economists, 14 percent would maintain the minimum wage at its;current level.;c.;In a 2006;survey of Ph.D. economists, 38 percent would increase the minimum wage.;d.;In a 2006;survey of Ph.D. economists, 10 percent would decrease the minimum wage.;98. Advocates;of the minimum wage;a.;deny that the;minimum wage produces any adverse effects.;b.;emphasize the;benefits to teenagers of increases in the minimum wage.;c.;emphasize the;low annual incomes of those who work for the minimum wage.;d.;All of the;above are correct.;99. Opponents;of the minimum wage point out that the minimum wage;a.;encourages;teenagers to drop out of school.;b.;prevents some;workers from getting needed on-the-job training.;c.;contributes;to the problem of unemployment.;d.;All of the;above are correct.;100.The;proportion of minimum-wage earners who are in families with incomes below the;poverty line is;a.;less than;one-third.;b.;between;one-third and one-half.;c.;between;one-half and two-thirds.;d.;greater than;two-thirds.;101.There;are several criticisms of the minimum wage.;Which of the following is not one of those criticisms?;a.;The minimum;wage often hurts those people who it is intended to help.;b.;The minimum;wage results in an excess supply of low-skilled labor.;c.;The minimum;wage prevents some unskilled workers from getting needed on-the-job training.;d.;The minimum;wage fails to raise the wage of any employed person.;102.An;outcome that can result from either a price ceiling or a price floor is;a.;a surplus in;the market.;b.;a shortage in;the market.;c.;a nonbinding;price control.;d.;long lines of;frustrated buyers.;103.An;outcome that can result from either a price ceiling or a price floor is;a.;an;enhancement of efficiency.;b.;undesirable;rationing mechanisms.;c.;a surplus.;d.;a shortage.;104.Price;ceilings and price floors that are binding;a.;are desirable;because they make markets more efficient and more fair.;b.;cause;surpluses and shortages to persist since price cannot adjust to the market;equilibrium price.;c.;can have the;effect of restoring a market to equilibrium.;d.;are imposed;because they can make the poor in the economy better off without causing;adverse effects.;105.When;government imposes a price ceiling or a price floor on a market;a.;price no;longer serves as a rationing device.;b.;efficiency in;the market is enhanced.;c.;shortages and;surpluses are eliminated.;d.;buyers and;sellers both become better off.;106.You;have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all;exports of oranges to Freedonia. Harpo;who is one of your advisors, suggests that you should impose a binding price;ceiling in order to avoid a shortage of oranges. Chico;another one of your advisors, argues that without a binding price floor, a;shortage will certainly develop. Zeppo;a third advisor, says that the best way to avoid a shortage of oranges is to take;no action at all. Which of your three;advisors is most likely to have studied economics?;a.;Harpo;b.;Chico;c.;Zeppo;d.;Apparently;all three advisors have studied economics, but their views on positive;economics are different.;Table 6-1;Price;Quantity;Demanded;Quantity;Supplied;$0;12;0;$1;10;2;$2;8;4;$3;6;6;$4;4;8;$5;2;10;$6;0;12;107.Refer;to Table 6-1. Which of the following;price ceilings would be binding in this market?;a.;$2;b.;$3;c.;$4;d.;$5;108.Refer;to Table 6-1. Which of the following;price floors would be binding in this market?;a.;$1;b.;$2;c.;$3;d.;$4;109.Refer;to Table 6-1. Suppose the government;imposes a price ceiling of $1 on this market.;What will be the size of the shortage in this market?;a.;0 units;b.;2 units;c.;8 units;d.;10 units;110.Refer;to Table 6-1. Suppose the government;imposes a price ceiling of $5 on this market.;What will be the size of the shortage in this market?;a.;0 units;b.;2 units;c.;8 units;d.;10 units;111.Refer;to Table 6-1. Suppose the government;imposes a price floor of $1 on this market.;What will be the size of the surplus in this market?;a.;0 units;b.;2 units;c.;8 units;d.;10 units;112.Refer;to Table 6-1. Suppose the government;imposes a price floor of $5 on this market.;What will be the size of the surplus in this market?;a.;0 units;b.;2 units;c.;8 units;d.;10 units;Price;Quantity;Demanded;Quantity;Supplied;$0;250;0;$5;200;75;$10;150;150;$15;100;225;$20;50;300;$25;0;375;113.Refer;to Table 6-2. Which of the following;statements is correct?;a.;A price;ceiling set at $5 will be binding and will result in a shortage of 50 units.;b.;A price;ceiling set at $5 will be binding and will result in a shortage of 75 units.;c.;A price ceiling;set at $5 will be binding and will result in a shortage of 125 units.;d.;A price;ceiling set at $5 will not be binding.;114.Refer;to Table 6-2. Which of the following;statements is correct?;a.;A price;ceiling set at $15 will be binding and will result in a shortage of 50 units.;b.;A price;ceiling set at $15 will be binding and will result in a shortage of 100;units.;c.;A price;ceiling set at $15 will be binding and will result in a shortage of 125;units.;d.;A price;ceiling set at $15 will not be binding.;115.Refer;to Table 6-2. Which of the following;statements is correct?;a.;A price floor;set at $20 will be binding and will result in a surplus of 50 units.;b.;A price floor;set at $20 will be binding and will result in a surplus of 100 units.;c.;A price floor;set at $20 will be binding and will result in a surplus of 250 units.;d.;A price floor;set at $20 will not be binding.;116.Refer;to Table 6-2. Which of the following;statements is correct?;a.;A price floor;set at $5 will be binding and will result in a surplus of 50 units.;b.;A price floor;set at $5 will be binding and will result in a surplus of 75 units.;c.;A price floor;set at $5 will be binding and will result in a surplus of 125 units.;d.;A price floor;set at $5 will not be binding.;Table 6-3;The following;table contains the demand schedule and supply schedule for a market for a;particular good. Suppose sellers of the;good successfully lobby Congress to impose a price floor $2 above the;equilibrium price in this market.;Price;Quantity;Demanded;Quantity;Supplied;$0;15;0;$1;13;3;$2;11;6;$3;9;9;$4;7;12;$5;5;15;$6;3;18;117.Refer;to Table 6-3. How many units of the;good are sold after the imposition of the price floor?;a.;5;b.;9;c.;10;d.;15;118.Refer;to Table 6-3. Following the;imposition of a price floor $2 above the equilibrium price, irate buyers;convince Congress to repeal the price floor and to impose a price ceiling $1;below the former price floor. The;resulting market price is;a.;$2.;b.;$3.;c.;$4.;d.;$5.;119.Refer;to Table 6-3. Following the;imposition of a price floor $2 above the equilibrium price, irate buyers;convince Congress to repeal the price floor and to impose a price ceiling $1;below the former price floor. The resulting;shortage is;a.;0 units.;b.;2 units.;c.;5 units.;d.;7 units.;A;Table 6-4;The following;table contains the demand schedule and supply schedule for a market for a;particular good. Suppose sellers of the;good successfully lobby Congress to impose a price floor $3 above the;equilibrium price in this market.;Price;Quantity;Demanded;Quantity;Supplied;$0;15;0;$1;13;3;$2;11;6;$3;9;9;$4;7;12;$5;5;15;$6;3;18;120.Refer;to Table 6-4. How many units of the;good are sold after the imposition of the price floor?;a.;3;b.;9;c.;15;d.;18;121.Refer;to Table 6-4. Following the;imposition of a price floor $3 above the equilibrium price, irate buyers;convince Congress to repeal the price floor and to impose a price ceiling $1;below the former price floor. The;resulting market price is;a.;$2.;b.;$3.;c.;$4.;d.;$5.;122.Refer;to Table 6-4. Following the;imposition of a price floor $3 above the equilibrium price, irate buyers;convince Congress to repeal the price floor and to impose a price ceiling $1;below the former price floor. The;resulting shortage is;a.;0 units.;b.;4 units.;c.;5 units.;d.;10 units.;Figure;6-1;Panel (a) Panel;(b);123.Refer;to Figure 6-1. A binding price;ceiling is shown in;a.;panel (a) but;not panel (b).;b.;panel (b) but;not panel (a).;c.;both panel;(a) and panel (b).;d.;neither panel;(a) nor panel (b).;124.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) but;not panel (b);b.;panel (b) but;not panel (a);c.;both panel;(a) and panel (b);d.;neither panel;(a) nor panel (b);125.Refer;to Figure 6-1. The situation in;panel (a) may be described as one in which;a.;the price;ceiling is not binding.;b.;the price ceiling;really functions as a price floor.;c.;a surplus of;the good will be observed.;d.;Both (b) and;(c) are correct.;Figure;6-2;Panel (a) Panel;(b);126.Refer;to Figure 6-2. A binding price floor;is shown in;a.;both panel;(a) and panel (b).;b.;panel (a) but;not panel (b).;c.;panel (b) but;not panel (a).;d.;neither panel;(a) nor panel (b).;127.Refer;to Figure 6-2. In panel (b), there;will be;a.;a shortage of;wheat.;b.;equilibrium;in the market.;c.;a surplus of;wheat.;d.;lines of;people waiting to buy wheat.;Figure;6-3;128.Refer;to Figure 6-3. Which of the;following price ceilings would be binding in this market?;a.;$8.;b.;$10.;c.;$12.;d.;$14.;129.Refer;to Figure 6-3. Which of the;following price floors would be binding in this market?;a.;$6.;b.;$8.;c.;$10.;d.;$12.;130.Refer;to Figure 6-3. Which of the;following statements is correct?;a.;A price;ceiling set at $12 would be binding, but a price ceiling set at $8 would not;be binding.;b.;A price floor;set at $8 would be binding, but a price ceiling set at $8 would not be;binding.;c.;A price;ceiling set at $9 would result in a surplus.;d.;A price floor;set at $11 would result in a surplus.;131.Refer;to Figure 6-3. If the government;imposes a price ceiling of $8 on this market, then there will be a;a.;shortage of;0.;b.;shortage of;10.;c.;shortage of;20.;d.;shortage of;40.;132.Refer;to Figure 6-3. If the government;imposes a price ceiling of $12 on this market, then there will be a;a.;shortage of;0.;b.;shortage of;10.;c.;shortage of;20.;d.;shortage of;40.;133.Refer;to Figure 6-3. If the government;imposes a price floor of $6 on this market, then there will be a;a.;surplus of 0.;b.;surplus of;20.;c.;surplus of;30.;d.;surplus of;40.;134.Refer;to Figure 6-3. If the government;imposes a price floor of $14 on this market, then there will be a;a.;surplus of 0.;b.;surplus of;20.;c.;surplus of;30.;d.;surplus of;40.;135.Refer;to Figure 6-3. In which of the;following cases would sellers have to develop a rationing mechanism?;a.;A price;ceiling is set at $8.;b.;A price;ceiling is set at $12.;c.;A price floor;is set at $8.;d.;A price floor;is set at $12.

 

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