Econ test

A Price floor can case A.surplus B.Shortage

A.surplus

A Price ceilings can case A.surplus B.Shortage

B.Shortage

If the government is effective is regulating price ceilings, a binding price ceiling will cause: a. a shortage, which cannot be eliminated through market adjustment. b. a surplus, which cannot be eliminated through market adjustment. c. a shortage, which is temporary, since market adjustment will cause price to rise. d. a surplus, which is temporary, since market adjustment will cause price to rise.

a. a shortage, which cannot be eliminated through market adjustment.

24. If a change in price causes total revenue to change in the same direction, we can conclude that the demand is: a. inelastic. b. elastic. c. unit-elastic. d. perfectly elastic.

a. inelastic.

A binding minimum wage will MOST likely lead to a situation where: a. some unskilled workers have a difficult time finding a job. b. employers must encourage workers to apply for positions. c. employers will have difficulty finding enough workers for their positions. d. workers are generally guaranteed employment.

a. some unskilled workers have a difficult time finding a job.

25. In a small town in Kansas, the owner of the town's only gas station claims that he will sell the same quantity of gas no matter how high or low the price. If his assertion is correct, the demand curve for gas at his station must be _____, with a price elasticity of _____. a. vertical; zero b. vertical; infinity c. horizontal; zero d. horizontal; infinity

a. vertical; zero

A binding price floor will cause: a. excess demand for the good, as the price will exceed the equilibrium price. b. excess supply of the good, as the price will exceed the equilibrium price. c. excess demand for the good, as the price will fall below the equilibrium price. d. excess supply of the good, as the price will fall below the equilibrium price.

b. excess supply of the good, as the price will exceed the equilibrium price.

The income elasticity of demand for fresh artisanal cheese has been estimated at 0.57. If income grows by 5% in a given period, demand will: a. increase by more than 5.7%. b. increase by about 2.9%. c. decrease by more than 5.7%. d. decrease by less than 5.7%.

b. increase by about 2.9%. Income elasticity of demand Change of quantity demand / change in Income Income=5% quantity demand=0.57 0.57*0.05%*100=2.85 or 2.9 is good

The income elasticity of demand for fresh winter vegetables has been estimated to be 0.6. If income grows by 10% in a given period, demand will: a. increase by more than 10%. b. increase by about 6%. c. decrease by more than 10%. d. decrease by less than 6%.

b. increase by about 6% Income elasticity of demand Change of quantity demand / change in Income Income=10% quantity demand=0.6. Because 0.6*0.1*100=6

If government controls the amount of a good transacted in a market, this will: a. leave consumer and producer surplus at their maximum levels. b. increase incentives for market participants to engage in black market activities. c. result in overproduction because of higher prices. d. lead to an efficient allocation of resources.

b. increase incentives for market participants to engage in black market activities.

If your purchases of yoga pants decrease from 11 pairs per year to 9 pairs per year when your income increases from $39,000 to $44,000 a year, for you, yoga pants are a(n) _____ good. a. normal b. inferior c. complementary d. substitute

b. inferior

A binding price ceiling would result in a(n): a. surplus of the good. b. shortage of the good. c. quantity control. d. equilibrium price.

b. shortage of the good.

An binding quantity control would result in a(n): a. surplus of the good. b. shortage of the good. c. price ceiling. d. price floor.

b. shortage of the good.

If a price ceiling and a price floor yield the same quantity restriction, the deadweight loss caused by the price ceiling will be _____ the deadweight caused by the price floor. a. smaller than b. larger than c. equal to d. smaller than, larger than, or equal to

c. equal to

26. Maple syrup prices recently increased by 25%. In response, purchases of maple syrup decreased by 5%. The price elasticity of demand for maple syrup is: a=5 b=2 c=0.2 d=0.5

c=0.2 Because the price elasticity of demand is % change in quantity supplied / %change in price maple syrup=Supplie=%5 The prices is 25% 5% / 25%=0.002*100=0.2