Ch 4 micro

If the relative price of 4 unit of good X is 1 units of good Y, then it follows that the absolute price of good X can be __________ and the absolute price of good Y can be __________. Select one: a. $8000; $2,000 b. $40,000; $8,000 c. $20,000; $80,000 d. $5,000; $40,000

$20,000; $80,000

Refer to Exhibit 1. Suppose the good shown is being sold at the $3 price ceiling. At a quantity of 90 units, what is the maximum per-unit price buyers would be willing to pay for a good "tied" to the good shown in the exhibit? Select one: a. $3 b. $4 c. $5 d. $2 e. none of the above

$5

If the price of good X is $8 and the price of good Y is $32, it follows that the relative price of one unit of good X is _____________ unit(s) of good Y. Select one: a. 0.25 b. 2.00 c. 0.75 d. 1.33 e. 0.50

0.25

Refer to Exhibit 4. If the sugar market is in competitive equilibrium the total surplus will equal Select one: a. area 1 + 2 + 3 b. area 1 + 2 + 3 + 4 c. area 1 + 2 + 3 + 4 + 5 d. area 1 + 2 + 3 + 4 + 5 + 6 e. area 1 + 2 + 3 + 4 + 5 + 6 + 7

1 + 2 + 3 + 4 + 5 + 6

Refer to Exhibit 4. If the sugar market is in competitive equilibrium the producers' surplus will equal Select one: a. area 1 + 2 + 3 b. area 1 + 2 + 4 c. area 3 + 5 d. area 1 + 2 + 5 e. area 1 + 2 + 3 + 4 + 5

1 + 2 + 5

Refer to Exhibit 5. Suppose that the government imposes a price ceiling at a price of $6. The number of units that would be exchanged in this market would be Select one: a. 145, since that is the equilibrium quantity and the price ceiling is below the equilibrium price. b. 130, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). c. 180, since that is the number of units demanded at the price ceiling (and the quantity demanded is greater than the quantity supplied). d. 155, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

130, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded).

Refer to Exhibit 5. Suppose that the government imposes a price ceiling at a price of $9. The number of units that would be exchanged in this market would be Select one: a. 80, since that is the number of units demanded at the price ceiling. b. 230, since that is the number of units supplied at the price ceiling. c. 135, since that is the average of the quantity demanded and the quantity supplied at the price ceiling. d. 145, since that is the equilibrium quantity and the price ceiling is above the equilibrium price.

145, since that is the equilibrium quantity and the price ceiling is above the equilibrium price.

Refer to Exhibit 5. Suppose that the government imposes a price ceiling at a price of $5. _________ units would be exchanged in a free market, and ____________ units would be exchanged with the price ceiling in effect. Select one: a. 145; 200 b. 115; 145 c. 145; 115 d. 200; 145

145; 115

Refer to Exhibit 5. Suppose that the government imposes a price ceiling at a price of $9. _________ units would be exchanged in a free market, and ____________ units would be exchanged with the price ceiling in effect. Select one: a. 145; 80 b. 80; 145 c. 145; 145 d. 80; 190

145; 145

Refer to Exhibit 1. In a free market, ________ units of the good would be exchanged. With a price ceiling, _______ units of the good would be exchanged. Select one: a. 90; 150 b. 150; 90 c. 210; 150 d. 150; 210

150; 90

If the price of good X is $20 and the price of good Y is $50, it follows that the relative price of one unit of good Y is ___________ unit(s) of good X. Select one: a. 0.40 b. 0.20 c. 2.50 d. 4.00 e. There is not enough information to answer the question.

2.50

Refer to Exhibit 4. Suppose that the government imposes a price floor in the sugar market at $16. How many fewer units of sugar will be sold at the price floor than at the equilibrium price? Select one: a. 150 b. 100 c. 50 d. 0

50

Refer to Exhibit 4. Suppose that the government imposes a price floor in the sugar market at $16. What is the quantity of sugar purchased at this price? Select one: a. 150 b. 100 c. 50 d. There is not enough information to answer this question.

50

Refer to Exhibit 1. How many fewer units are exchanged because of the price ceiling than ultimately would be exchanged in a free market? Select one: a. 50 b. 60 c. 65 d. 120

60

Refer to Exhibit 1. The number of units exchanged at the price ceiling is Select one: a. 210. b. 150. c. 90. d. 120.

90.

Which of the following statements is true? Select one: a. A price ceiling is a government-mandated minimum price below which legal trades cannot be made. b. A price ceiling is a government-mandated minimum price above which legal trades cannot be made. c. A price ceiling is a government-mandated maximum price above which legal trades cannot be made. d. A price ceiling is a government-mandated maximum price below which legal trades cannot be made.

A price ceiling is a government-mandated maximum price above which legal trades cannot be made.

Exhibit 2 represents the milk market. The horizontal line at $4 shows a price ceiling imposed by the government. Which of the following statements is true at this price? Select one: a. At the price ceiling the surplus equals 200 units. b. At the price ceiling the surplus equals 400 units. c. At the price ceiling the shortage equals 400 units. d. At the price ceiling the shortage equals 200 units. e. none of the above

At the price ceiling the shortage equals 400 units.

Refer to Exhibit 3. Which of the following statement is true? Select one: a. If a price ceiling is set at $8, it will have an effect on the market for good X. b. If a price floor is set at $8, it will have an effect on the market for good X. c. The equilibrium price for good X is $8. d. The highest price that can legally be charged in the market for good X is $8.

If a price floor is set at $8, it will have an effect on the market for good X.

Suppose the equilibrium price for a product is $3 and the government set a price ceiling at $4 (a price ceiling above the equilibrium price of a given good). Which of the following is the most likely result? Select one: a. Some other rationing device will emerge to allocate the good among buyers. b. Some buyers and sellers will be willing to risk breaking the law in order to exchange the goods. c. No change will occur in the market. d. here may be buyers who are willing to pay quite high prices so they can consume more than what they are consuming now. e. a, b, and d

No change will occur in the market.

Which of the following statements is true? Select one: a. One of the effects of a price floor (set above equilibrium price) is more satisfied customers. b. One of the effects of a price floor (set above equilibrium price) is higher-quality goods are produced. c. One of the effects of a price floor (set above equilibrium price) is a surplus. d. all of the above e. none of the above

One of the effects of a price floor (set above equilibrium price) is a surplus.

Refer to Exhibit 4. Suppose that sugar producers lobby the government for a price floor and receive one. This price floor is set at $16. What has happened to the producers' surplus as a result of the imposition of the price floor? Select one: a. Producers' surplus has risen by (area 2 + 3) b. Producers' surplus has fallen by (area 5 + 6) c. Producers' surplus has changed by (area 3 - area 5) d. Producers' surplus has changed by (area 2 - area 5)

Producers' surplus has changed by (area 3 - area 5)

Refer to Exhibit 4. Suppose that sugar producers lobby the government for a price floor and receive one. This price floor is set at $16. What is the change in the total surplus at the price floor, compared to at the equilibrium price? Select one: a. There was a gain in total surplus equal to (area 1 + 2 + 3) b. There was a gain in total surplus equal to (area 1 + 2 + 3 + 4 + 5) c. There was a loss in total surplus equal to (area 4 + 5) d. There was a loss in total surplus equal to (area 5 + 6)

There was a loss in total surplus equal to (area 5 + 6)

Exhibit 2 illustrates the milk market. The horizontal line represents a price ceiling imposed by the government. Which of the following is true? Select one: a. The quantity demanded at the price ceiling is larger than the quantity supplied. b. The quantity supplied at the price ceiling will equal the quantity sold. c. The quantity demanded at the price ceiling will equal the quantity supplied. d. The quantity demanded at the price ceiling will equal the quantity sold. e. a and b. f. c and d.

a and b.

Gorge is a good mechanic. However, all customers who come to him for a break job have to buy an oil change service as well. This type of arrangement is known as Select one: a. a tie-in sale. b. a sweetheart deal. c. an exclusive contract. d. a cross subsidy.

a tie-in sale.

Which of the following statements is true? Select one: a. Price serves as a rationing device. b. Price serves as a transmitter of information. c. Price serves as a means of determining who gets what of the available limited resources and goods. d. a and b e. all of the above

all of the above

If the equilibrium price for a product is $3 and the government set a price ceiling at $2.5, it results in: Select one: a. a shortage. b. fewer exchanges. c. nonprice rationing devices. d. all of the above. e. a and c.

all of the above.

Suppose that the equilibrium price in the milk market is $ 1.5 per gallon. The government sets a price floor at $3 per gallon. It can be said that at the price floor, Select one: a. although sellers are selling all of the product that they desire at this price, the consumers are not able to buy all that they desire. b. although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire. c. both sellers and buyers are satisfied with the quantity that is being exchanged. d. both sellers and buyers are exchanging the equilibrium quantity of this good. e. b and d

although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire.

There are two goods in the economy, apples and bread. The relative price of apples has decreased. This could be due to Select one: a. an increase in the absolute price of apples, ceteris paribus. b. a decrease in the absolute price of bread, ceteris paribus. c. an increase in the absolute price of bread, ceteris paribus. d. a and b e. b and c

an increase in the absolute price of bread, ceteris paribus.

Refer to Exhibit 4. Suppose that the government imposes a price floor in the sugar market at $16. What is the size of the producers' surplus at this price? Select one: a. area 2 + 3 + 4 + 5 b. area 1 + 2 c. area 1 + 2 + 3 d. area 1 + 2 + 5

area 1 + 2 + 3

Refer to Exhibit 4. Suppose that sugar producers lobby the government for a price floor and this price floor is set at $16. What is the size of the total surplus at this price? Select one: a. area 1 + 2 + 3 b. area 1 + 2 + 3 + 4 c. area 1 + 2 + 3 + 4 + 5 d. area 1 + 2 + 3 + 4 + 5 + 6

area 1 + 2 + 3 + 4

Refer to Exhibit 4. If the sugar market is in competitive equilibrium, the consumers' surplus will equal Select one: a. area 2 + 3 + 4 b. area 1 + 2 + 3 + 4 c. area 3 + 4 + 6 d. area 1 + 2 + 3 + 4 + 5 e. area 3 + 6

area 3 + 4 + 6

Refer to Exhibit 4. Suppose that the government imposes a price floor in the sugar market at $16. What is the size of the consumers' surplus at this price? Select one: a. area 5 b. area 4 c. area 1 + 2 + 4 d. area 1

area 4

Refer to Exhibit 3. If a price ceiling is mandated at $4, then Select one: a. the quantity exchanged is 600. b. there is a shortage in this market. c. it is the highest price that can legally be charged in this market. d. both b and c. e. all of the above

both b and c.

Refer to Exhibit 4. Suppose that the government imposes a price floor in the sugar market at $16. What has happened to the consumers' surplus as a result of the imposition of the price floor? Select one: a. consumers' surplus has risen by (area 2 + 4) b. consumers' surplus has gone down by (area 3 + 6) c. consumers' surplus has gone down by (area 2 - area 5) d. consumers' surplus has risen by (area 2 + 3)

consumers' surplus has gone down by (area 3 + 6)

If the equilibrium price is $2 and the government set a price floor at $3 then this price floor would be a government-mandated Select one: a. minimum price below which legal trades cannot be made. b. maximum price above which legal trades cannot be made. c. minimum price at which all units of the good must be legally sold. d. minimum price below which legal trades can be made.

minimum price below which legal trades cannot be made.

If the equilibrium wage in the market for unskilled labor is $8 per hour and the minimum wage law sets a wage floor at $7 per hour in this market, then the Select one: a. minimum wage will create a surplus of unskilled labor. b. minimum wage will create a shortage of unskilled labor. c. minimum wage will not affect the unskilled labor market. d. unskilled labor market will change, but we cannot be certain how.

minimum wage will not affect the unskilled labor market.

The price of wheat is $.75, and the government mandate a price floor (set above the equilibrium price). It will Select one: a. force otherwise profitable farmers out of business. b. result in a shortage of wheat. c. result in a surplus of wheat. d. clear the market for wheat. e. both a and b

result in a surplus of wheat.

Suppose that the price of rice is $3 per pound and the price of wheat is $2 per pound. If the price of rice rises to $3.25 and the price of wheat rises to $2.40, then the absolute price of rice has _______________ and the relative price of rice has _______________. Select one: a. risen; fallen b. fallen; risen c. risen; risen d. fallen; fallen

risen; fallen

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound. If the price of butter rises to $3.60 and the price of margarine rises to $3, then the absolute price of butter has _______________ and the relative price of margarine has _______________. Select one: a. risen; fallen b. fallen; risen c. risen; risen d. fallen; fallen

risen; risen

When the price of a good rises, the price is transmitting information indicating that the good is relatively Select one: a. scarcer. b. less scarce. c. more plentiful in supply. d. b and c

scarcer.

Refer to Exhibit 3. If a price ceiling is mandated at $4, then Select one: a. there is a surplus in the market for good X. b. the price at which exchange legally takes place is $4. c. the price at which exchange legally takes place is $6. d. the highest price that can legally be charged in this market is $8. e. both a and d

the price at which exchange legally takes place is $4.

Refer to Exhibit 3. If a price ceiling is mandated at $8, then Select one: a. there is a surplus in the market for good X. b. the price at which exchange takes place is $8. c. the price at which exchange takes place is $6. d. there is a shortage in the market for good X. e. a and b

the price at which exchange takes place is $6.

Refer to Exhibit 3. If a price ceiling is mandated at $6, then Select one: a. there is a shortage in the market for good X. b. the highest price that can legally be charged in this market is $8. c. the quantity exchanged is equal to the quantity demanded. d. all of the above

the quantity exchanged is equal to the quantity demanded.