Question 1

Price ceilings would create all of the following effects EXCEPT:

Accepted Answer

A)  shortages.
B)  reductions in product quality.
C)  a misallocation of resources.
D)  maximum gains from trade.E) A) and D)
F) A) and C)

Question 2

Ultimately repealing the price controls on gasoline and oil:

Accepted Answer

A)  led to permanently higher gasoline prices.
B)  led to a higher supply of gasoline and lower prices.(True Answer ) Correct
C)  was disastrous as the market collapsed due to a lack of government regulation.
D)  was not able to eliminate the shortages of gasoline in the United States.E) B) and C)
F) A) and B)

Question 3

Once you account for time costs and bribes, it may be moreexpensive to make purchases at the government-controlledprice than at the free-market price.

Accepted Answer

A) True 
 B)False

Question 4

The presence of price floors in a market usually is anindication that:

Accepted Answer

A)  there is an insufficient quantity of a good or service being produced.
B)  the forces of supply and demand are unable to establish an equilibrium price.
C)  sellers of the good or service outnumber the buyers.(True Answer ) Correct
D)  policy makers believe the price floor does not involve inequities.E) A) and C)
F) None of the above

Question 5

In a market with a price ceiling which of the following isTRUE?

Accepted Answer

A)  Buyers and sellers experience unexploited gains from trade.
B)  Resources are allocated to their most efficient uses.
C)  The supply of goods is sold by the sellers with the lowest costs.
D)  The supply of goods is bought by the buyers with the highest willingness to pay.E) A) and B)
F) None of the above

Question 6

The minimum wage is an example of a price floor in the labormarket.

Accepted Answer

A) True 
 B)False

Question 7

The U.S. Congress first instituted the minimum wage in:

Accepted Answer

A)  1914.
B)  1974.
C)  1938.
D)  1925.E) B) and D)
F) A) and C)

Question 8

(Figure: Costs of Price Ceilings)  Refer to the figure. What is thedollar amount of the value of wasted time if a price ceiling of $4is implemented?

Accepted Answer

A)  $160
B)  $180
C)  $320
D)  $220E) All of the above
F) C) and D)

Question 9

A market with price ceilings fails to maximize all of thefollowing EXCEPT:

Accepted Answer

A)  the gains from trade.
B)  consumer surplus.
C)  excess supply.
D)  producer surplus.E) None of the above
F) A) and D)

Question 10

Figure: Costs of Price Ceilings  (Figure: Costs of Price Ceilings)  Refer to the figure. What is thedollar amount of lost producer surplus after the price ceiling of$4 has been implemented?

Accepted Answer

A)  $90
B)  $10
C)  $160
D)  $80E) None of the above
F) A) and B)

Question 11

If a price ceiling on gasoline is imposed, the total price ofgasoline a buyer pays is likely to equal the legal price:

Accepted Answer

A)  minus the value of wasted time.
B)  minus the value of bribery.
C)  plus the value of consumer surplus.
D)  plus the value of corruption.E) None of the above
F) C) and D)

Question 12

Suppose a $3 per gallon price ceiling is imposed on gasolineand the equilibrium price of gasoline is $2 per gallon. Such aprice ceiling would lead to long lines at gas stations.

Accepted Answer

A) True 
 B)False

Question 13

Because of government price controls, a business must now sellsoft-serve ice cream at half its original price. This businessmight respond by:

Accepted Answer

A)  offering smaller servings of ice cream.
B)  skimping on toppings of nuts, fudge, and cherries.
C)  reducing hours of operation.
D)  All of the answers are correct.E) B) and C)
F) None of the above

Question 14

(Figure: Price Ceilings and Consumer Valuation)  Refer to thefigure. Suppose a price ceiling of $3 goes into effect. What is theloss of consumer surplus due to the random allocation of pricecontrolled goods compared to the allocation only to the highestvalue users?

Accepted Answer

A)  $90
B)  $60
C)  $150
D)  $30E) A) and B)
F) A) and C)

Question 15

The price controls of the early 1970s caused:

Accepted Answer

A)  lead to be removed from gasoline.
B)  the disappearance of the full-service gas station.(True Answer ) Correct
C)  gas stations to stay open for more hours.
D)  an excess supply of gasoline.E) All of the above
F) A) and C)

Question 16

Which of the following events occurred during the 1973-1974oil crisis in the United States?

Accepted Answer

A)  Gas stations were ordered to be closed between 9 PM on Saturday and 12:01 AM on Monday.
B)  Daylight savings time was implemented.
C)  There were shortages of steel drilling equipment.
D)  All of the answers are correct.E) A) and B)
F) A) and C)

Question 17

Which of the following statements is NOT true?
I. The increase in the minimum wage in Puerto Rico in 1938did not affect Puerto Rico's unemployment rate
II.About 15 percent of all hourly workers in the United Statesearn the minimum wage
III. Raising the minimum wage is an effective method tocombat poverty.IV. Raising the minimum wage decreases employment of low-skilled workers.

Accepted Answer

A)  I and II only
B)  II and III only
C)  I, II, and IV only
D)  IV onlyE) C) and D)
F) B) and C)

Question 18

What is blat?

Accepted Answer

A)  a long line
B)  the time costs associated with buying price controlled goods
C)  the use of political connections to get favors (True Answer ) Correct
D)  a dilapidated rent-controlled apartment.E) C) and D)
F) None of the above

Question 19

Prices ceilings misallocate resources because with themresources are not necessarily allocated to their highest-valueduse.

Accepted Answer

A) True 
 B)False

Question 20

(Figure: Price Ceiling of Ps)  Refer to the figure. Suppose a priceceiling of Ps is imposed. As a result:

Accepted Answer

A)  the quantity supplied in the market is Qs.
B)  buyers' willingness to pay for the good is Pd.
C)  the quantity demanded in the market is Qd.
D)  All of the answers are correct.E) C) and D)
F) B) and C)

Exam 8: Perfect Competition

(Figure: Price Ceiling of Ps) Refer to the figure. Suppose a priceceiling of Ps is imposed. As a result:

Correct Answer
verified

(Figure: Price Ceilings and Consumer Valuation) Refer to thefigure. Suppose a price ceiling of $3 goes into effect. What is theloss of consumer surplus due to the random allocation of pricecontrolled goods compared to the allocation only to the highestvalue users?

Correct Answer
verified

The U.S. Congress first instituted the minimum wage in:

Correct Answer
verified

Price ceilings would create all of the following effects EXCEPT:

Correct Answer
verified

Figure: Costs of Price Ceilings (Figure: Costs of Price Ceilings) Refer to the figure. What is thedollar amount of lost producer surplus after the price ceiling of$4 has been implemented?

Correct Answer
verified

In a market with a price ceiling which of the following isTRUE?

Correct Answer
verified

The minimum wage is an example of a price floor in the labormarket.

Correct Answer
verified

Correct Answer
verified

Once you account for time costs and bribes, it may be moreexpensive to make purchases at the government-controlledprice than at the free-market price.

Correct Answer
verified

Suppose a $3 per gallon price ceiling is imposed on gasolineand the equilibrium price of gasoline is $2 per gallon. Such aprice ceiling would lead to long lines at gas stations.

Correct Answer
verified

A market with price ceilings fails to maximize all of thefollowing EXCEPT:

Correct Answer
verified

The price controls of the early 1970s caused:

Correct Answer
verified

The presence of price floors in a market usually is anindication that:

Correct Answer
verified

(Figure: Costs of Price Ceilings) Refer to the figure. What is thedollar amount of the value of wasted time if a price ceiling of $4is implemented?

Correct Answer
verified

Prices ceilings misallocate resources because with themresources are not necessarily allocated to their highest-valueduse.

Correct Answer
verified

If a price ceiling on gasoline is imposed, the total price ofgasoline a buyer pays is likely to equal the legal price:

Correct Answer
verified

Because of government price controls, a business must now sellsoft-serve ice cream at half its original price. This businessmight respond by:

Correct Answer
verified

Ultimately repealing the price controls on gasoline and oil:

Correct Answer
verified

What is blat?

Correct Answer
verified

Which of the following events occurred during the 1973-1974oil crisis in the United States?

Correct Answer
verified

Exam 8: Perfect Competition

(Figure: Price Ceiling of Ps) Refer to the figure. Suppose a priceceiling of Ps is imposed. As a result:

Correct AnswerverifiedShow Answer

(Figure: Price Ceilings and Consumer Valuation) Refer to thefigure. Suppose a price ceiling of $3 goes into effect. What is theloss of consumer surplus due to the random allocation of pricecontrolled goods compared to the allocation only to the highestvalue users?

Correct AnswerverifiedShow Answer

The U.S. Congress first instituted the minimum wage in:

Correct AnswerverifiedShow Answer

Price ceilings would create all of the following effects EXCEPT:

Correct AnswerverifiedShow Answer

Figure: Costs of Price Ceilings (Figure: Costs of Price Ceilings) Refer to the figure. What is thedollar amount of lost producer surplus after the price ceiling of$4 has been implemented?

Correct AnswerverifiedShow Answer

In a market with a price ceiling which of the following isTRUE?

Correct AnswerverifiedShow Answer

The minimum wage is an example of a price floor in the labormarket.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Once you account for time costs and bribes, it may be moreexpensive to make purchases at the government-controlledprice than at the free-market price.

Correct AnswerverifiedShow Answer

Suppose a $3 per gallon price ceiling is imposed on gasolineand the equilibrium price of gasoline is $2 per gallon. Such aprice ceiling would lead to long lines at gas stations.

Correct AnswerverifiedShow Answer

A market with price ceilings fails to maximize all of thefollowing EXCEPT:

Correct AnswerverifiedShow Answer

The price controls of the early 1970s caused:

Correct AnswerverifiedShow Answer

The presence of price floors in a market usually is anindication that:

Correct AnswerverifiedShow Answer

(Figure: Costs of Price Ceilings) Refer to the figure. What is thedollar amount of the value of wasted time if a price ceiling of $4is implemented?

Correct AnswerverifiedShow Answer

Prices ceilings misallocate resources because with themresources are not necessarily allocated to their highest-valueduse.

Correct AnswerverifiedShow Answer

If a price ceiling on gasoline is imposed, the total price ofgasoline a buyer pays is likely to equal the legal price:

Correct AnswerverifiedShow Answer

Because of government price controls, a business must now sellsoft-serve ice cream at half its original price. This businessmight respond by:

Correct AnswerverifiedShow Answer

Ultimately repealing the price controls on gasoline and oil:

Correct AnswerverifiedShow Answer

What is blat?

Correct AnswerverifiedShow Answer

Which of the following events occurred during the 1973-1974oil crisis in the United States?

Correct AnswerverifiedShow Answer

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