Question 1

Ceteris paribus,if the market demand for a product decreases,then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

A)   increase; increase
B)   indeterminate; decrease
C)   indeterminate; increase
D)   decrease; decreaseE) C) and D)
F) B) and D)

Question 2

Ceteris paribus,if the market supply of a product increases,then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

A)   increase; decrease
B)   decrease; increase
C)   increase; increase
D)   decrease; indeterminateE) A) and B)
F) A) and C)

Question 3

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)   floor.
B)   subsidy.
C)   support.
D)   ceiling.E) None of the above
F) A) and C)

Question 4

Exhibit 5-8  Refer to Exhibit 5-8.The graph portrays the market for gasoline for which a ____ has been imposed,and,as a result,a ____ of gasoline occurs.

Accepted Answer

A)   price floor; surplus
B)   price ceiling; shortage
C)   price ceiling; surplus
D)   price floor; shortageE) B) and D)
F) C) and D)

Question 5

Assuming that the demand and supply of a good have moved in opposite directions,but 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)   an indeterminate change in price, but no change in quantity exchanged.E) C) and D)
F) A) and C)

Question 6

Exhibit 5-7  Refer to Exhibit 5-7.If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon,the result is:

Accepted Answer

A)   a shortage of exactly 1,200 gallons of milk.
B)   a surplus of exactly 1,000 gallons of milk.
C)   that some consumers will not be able to buy milk at that price.
D)   that some sellers will not be able to sell available milk at that price.E) B) and D)
F) C) and D)

Question 7

When a demand curve shifts,both the equilibrium price and quantity traded will change in the same direction as a result.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 5-5  Refer to Exhibit 5-5.The movement from ____ to ____ is consistent with a strike by the Basque Shepherds Guild.

Accepted Answer

A)   Point A; Point I
B)   Point A; Point F
C)   Point A; Point D
D)   Point A; Point HE) B) and D)
F) A) and C)

Question 9

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Accepted Answer

A)   a smaller quantity of the good is bought and sold.
B)   a smaller quantity of the good is demanded.
C)   a larger quantity of the good is supplied.
D)   the price rises above the previous equilibrium.E) A) and B)
F) A) and C)

Question 10

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) A) and D)
F) A) and C)

Question 11

"Rent Control",a form of price control in which the government sets a limit to what apartment owners can charge a tenant,is a mechanism of:

Accepted Answer

A)   cost cutting.
B)   price ceiling.
C)   price floor.
D)   non-equilibrium pricing.E) A) and B)
F) A) and D)

Question 12

For quantity exchanged to decrease,but the price to rise,there must have been a(n)

Accepted Answer

A)   increase in demand.
B)   decrease in demand.
C)   increase in supply
D)   decrease in supply.E) None of the above
F) All of the above

Question 13

If American consumers decided to boycott grapes to protest working conditions of farm workers,everything else being equal,the:

Accepted Answer

A)   price of grapes will rise.
B)   supply of grapes will fall.
C)   quantity of grapes supplied will fall.
D)   demand curve for grapes shifts to the right.E) A) and C)
F) B) and C)

Question 14

Ceteris paribus,if the market supply of a product decreases,then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Accepted Answer

A)   increase; increase
B)   decrease; increase
C)   decrease; indeterminate
D)   increase; decreaseE) None of the above
F) B) and C)

Question 15

A simultaneous increase in demand and decrease in supply would lead to:

Accepted Answer

A)   increase in the equilibrium price and a decrease in the quantity sold.
B)   increase in both the equilibrium price and the quantity sold.
C)   decrease in both the equilibrium price and the quantity sold.
D)   uncertain effect on the equilibrium quantity but an increase in the equilibrium price.E) All of the above
F) C) and D)

Question 16

If a price floor is not binding,then

Accepted Answer

A)   the equilibrium price is above the price floor.
B)   the equilibrium price is below the price floor.
C)   there will be a surplus in the market.
D)   Both (a)  and (c)  are correct.E) All of the above
F) B) and C)

Question 17

Which of the following would most likely increase the price of chicken,a normal good?

Accepted Answer

A)   a reduction in the price of grains used to produce chicken feed
B)   a reduction in the price of beef, a substitute for chicken
C)   unusually hot weather that kills millions of chickens before they are ready for market
D)   a decrease in consumer incomeE) A) and B)
F) B) and C)

Question 18

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question.
2 and S1 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively. A)  $12; 10 B)  $12; 9 C)  $10; 17 D)  $8; 15" class="answers-bank-image d-inline" rel="preload" > Refer to Exhibit 5-3.If D2 and S1 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively.

Accepted Answer

A)   $12; 10
B)   $12; 9
C)   $10; 17
D)   $8; 15E) All of the above
F) B) and D)

Question 19

Price floors get their name from the fact that they represent a minimum price below which the legal price cannot fall.

Accepted Answer

A) True 
 B)False

Question 20

A surplus will result whenever the:

Accepted Answer

A)   government imposes a price floor below the equilibrium price.
B)   government imposes a price ceiling below the equilibrium price.
C)   government imposes a price floor above the equilibrium price.
D)   government imposes a price ceiling above the equilibrium price.E) All of the above
F) A) and B)

Exam 5: Markets in Motion and Price Controls

Exhibit 5-5 Refer to Exhibit 5-5.The movement from ____ to ____ is consistent with a strike by the Basque Shepherds Guild.

Correct AnswerverifiedShow Answer

"Rent Control",a form of price control in which the government sets a limit to what apartment owners can charge a tenant,is a mechanism of:

Correct AnswerverifiedShow Answer

Ceteris paribus,if the market supply of a product decreases,then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Correct AnswerverifiedShow Answer

If a price floor is not binding,then

Correct AnswerverifiedShow Answer

Exhibit 5-7 Refer to Exhibit 5-7.If the government intervenes in the market for milk and sets a price ceiling of $2.00 per gallon,the result is:

Correct AnswerverifiedShow Answer

If American consumers decided to boycott grapes to protest working conditions of farm workers,everything else being equal,the:

Correct AnswerverifiedShow Answer

A simultaneous increase in demand and decrease in supply would lead to:

Correct AnswerverifiedShow Answer

Ceteris paribus,if the market demand for a product decreases,then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Correct AnswerverifiedShow Answer

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Correct AnswerverifiedShow Answer

Assuming that the demand and supply of a good have moved in opposite directions,but by the same amount,the new equilibrium would represent:

Correct AnswerverifiedShow Answer

For quantity exchanged to decrease,but the price to rise,there must have been a(n)

Correct AnswerverifiedShow Answer

Ceteris paribus,if the market supply of a product increases,then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.

Correct AnswerverifiedShow Answer

Exhibit 5-8 Refer to Exhibit 5-8.The graph portrays the market for gasoline for which a ____ has been imposed,and,as a result,a ____ of gasoline occurs.

Correct AnswerverifiedShow Answer

A price ceiling will be binding only if it is set

Correct AnswerverifiedShow Answer

A legal maximum on the price at which a good can be sold is called a price

Correct AnswerverifiedShow Answer

Price floors get their name from the fact that they represent a minimum price below which the legal price cannot fall.

Correct AnswerverifiedShow Answer

When a demand curve shifts,both the equilibrium price and quantity traded will change in the same direction as a result.

Correct AnswerverifiedShow Answer

Which of the following would most likely increase the price of chicken,a normal good?

Correct AnswerverifiedShow Answer

Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.If D2 and S1 represent the demand and supply schedules in a particular market,the equilibrium price and quantity are ____ and ____,respectively.

Correct AnswerverifiedShow Answer

A surplus will result whenever the:

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Exhibit 5-5 Refer to Exhibit 5-5.The movement from to is consistent with a strike by the Basque Shepherds Guild.

Correct Answer
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Correct Answer
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Ceteris paribus,if the market supply of a product decreases,then equilibrium quantity will (be) and equilibrium price will (be) .

Correct Answer
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Correct Answer
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Ceteris paribus,if the market demand for a product decreases,then equilibrium quantity will (be) and equilibrium price will (be) .

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Ceteris paribus,if the market supply of a product increases,then equilibrium quantity will (be) and equilibrium price will (be) .

Correct Answer
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Exhibit 5-8 Refer to Exhibit 5-8.The graph portrays the market for gasoline for which a has been imposed,and,as a result,a of gasoline occurs.

Correct Answer
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Correct Answer
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Correct Answer
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Exhibit 5-3 Use the following information about demand and supply schedules to answer the question. Refer to Exhibit 5-3.If D₂ and S₁ represent the demand and supply schedules in a particular market,the equilibrium price and quantity are and ,respectively.

Correct Answer
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Correct Answer
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