Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the short run, it is necessary to ________ a good whenever excess demand exists. 1) A) price allocate B) nonprice ration C) increase production of D) discontinue distribution of Answer: B 2) Issuing coupons, waiting in line and catering to favored customers are all methods of 2) A) exploiting wealth. B) income distribution. C) nonprice rationing. D) unbiased favoritism. Answer: C 3) The ________ automatically distributes scarce goods. 3) A) command economy B) laissez faire economy C) barter system D) price system Answer: D 4) Attempts to bypass price rationing in the market 4) A) are an effective tool for aiding low - income households. B) are costly. C) are efficient. D) are easily administered. Answer: B 5) During periods of ________, favored customers receive special treatment from dealers. 5) A) price above equilibrium B) equilibrium C) excess supply D) excess demand Answer: D 6) A situation where illegal trading at market prices takes place is known in economics as a 6) A) smuggler's market. B) pirate market. C) command market. D) black market. Answer: D 7) When supply is ________ or the product is ________, then price is demand determined. 7) A) variable; unique B) fixed; standardized C) variable; standardized D) fixed; unique Answer: D 8) A government - imposed maximum price will have no economic impact if 8) A) there is a fixed supply of the good. B) it is below the equilibrium price. C) it is at or below the equilibrium price. D) it is above the equilibrium price. Answer: D 1
Transcript
Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) In the short run, it is necessary to ________ a good whenever excess demand exists. 1)A) price allocate B) nonprice rationC) increase production of D) discontinue distribution of
Answer: B
2) Issuing coupons, waiting in line and catering to favored customers are all methods of 2)A) exploiting wealth. B) income distribution.C) nonprice rationing. D) unbiased favoritism.
Answer: C
3) The ________ automatically distributes scarce goods. 3)A) command economy B) laissez faire economyC) barter system D) price system
Answer: D
4) Attempts to bypass price rationing in the market 4)A) are an effective tool for aiding low-income households.B) are costly.C) are efficient.D) are easily administered.
Answer: B
5) During periods of ________, favored customers receive special treatment from dealers. 5)A) price above equilibrium B) equilibriumC) excess supply D) excess demand
Answer: D
6) A situation where illegal trading at market prices takes place is known in economics as a 6)A) smuggler's market. B) pirate market.C) command market. D) black market.
Answer: D
7) When supply is ________ or the product is ________, then price is demand determined. 7)A) variable; unique B) fixed; standardizedC) variable; standardized D) fixed; unique
Answer: D
8) A government-imposed maximum price will have no economic impact if 8)A) there is a fixed supply of the good. B) it is below the equilibrium price.C) it is at or below the equilibrium price. D) it is above the equilibrium price.
Answer: D
1
9) If Leonardo is scalping tickets for a World Cup game, he will be successful at selling the tickets fora profit
9)
A) any time teams in the World Cup game are popular.B) when prices are too high.C) when the price set by the World Cup organizers is less than the market equilibrium price.D) only when there is excess supply.
Answer: C
10) If Andrew is scalping tickets for the Stanley Cup, he will be successful at selling the tickets for aprofit
10)
A) only when there is excess supply.B) any time the Stanley Cup is popular.C) when prices are too high.D) when the price set by the National Hockey League is less than the market equilibrium price.
Answer: D
Refer to the information provided in Figure 4.1 below to answer the questions that follow.
Figure 4.1
11) Refer to Figure 4.1. At the world price of 30 cents per apple the United States imports ________million apples per day.
11)
A) 2 B) 4 C) 6 D) 10Answer: C
12) Refer to Figure 4.1. The United States will import 2 million apples per day if a per-apple tax of________ is levied on imported apples.
12)
A) 10 cents B) 20 cents C) 30 cents D) 40 centsAnswer: A
13) Refer to Figure 4.1. The United States will import 6 million apples per day if a per-apple tax of________ is levied on imported apples.
13)
A) 0 cents B) 10 cents C) 20 cents D) 30 centsAnswer: A
2
14) Refer to Figure 4.1. Assume that initially there is free trade. The price of apples in the United Stateswill increase to 40 cents per apple if a ________ per apple tax tax is imposed.
14)
A) 10 cents B) 20 cents C) 30 cents D) 40 centsAnswer: A
15) Refer to Figure 4.1. Assume that initially there is free trade. The quantity demanded of apples willbe reduced by 2 million per day if the United States imposes a tax of ________ per apple.
15)
A) 10 cents B) 20 cents C) 30 cents D) 40 centsAnswer: A
Refer to the information provided in Figure 4.2 below to answer the questions that follow.
Figure 4.2
16) Refer to Figure 4.2. The market is initially in equilibrium at the intersection of S2 and D, and supplyshifts from S2 to S1. Which of the following statements is true?
16)
A) The market cannot move to a new equilibrium until there is also a change in supply.B) Price will still serve as a rationing device causing quantity demanded to rise from 8 to 11 soft
pretzels.C) There is no need for price to serve as a rationing device in this case because the new
equilibrium quantity is lower than the original equilibrium quantity.D) Price will still serve as a rationing device causing quantity supplied to fall from 8 to 4 soft
pretzels.Answer: B
17) An example of an effective price ceiling would be the government setting the price of wheat at________ per bushel when the market price is at $4.25 per bushel.
17)
A) $3.75 B) $5.00 C) $7.75 D) $12.00Answer: A
3
18) If the equilibrium price of gasoline is $3.00 per gallon and the government will not allow oilcompanies to charge more than $2.00 per gallon of gasoline, which of the following will happen?
18)
A) Demand must eventually decrease so that the market will come into equilibrium at a price of$2.00.
B) Supply must eventually increase so that the market will come into equilibrium at a price of$2.00.
C) The market will be in equilibrium at a price of $2.00.D) A nonprice rationing system such as ration coupons must be used to ration the available
supply of gasoline.Answer: D
19) An example of a ________ would be the government setting the price of coffee below theequilibrium price.
19)
A) non-income tax B) price ceilingC) rational expenditure D) black market
Answer: B
20) If the market price of green tea is $20.00 per pound but the government will not allow green teagrowers to charge more than $15.00 per pound of green tea, which of the following will happen?
20)
A) There will be a surplus of green tea.B) There will be a shortage of green tea.C) Supply must eventually increase so that the market will come into equilibrium at a price of
$17.50.D) Demand must eventually decrease so that the market will come into equilibrium at a price of
$17.50.Answer: B
21) In the short run, whenever excess demand exists, it is necessary to 21)A) ration the good. B) increase the supply of the good.C) put the good on sale. D) impose a price ceiling on the good.
Answer: A
22) The rationing mechanism in market economies is the adjustment of 22)A) price. B) demand. C) quantity. D) supply.
Answer: A
23) An effective price ceiling must be set 23)A) below the equilibrium price. B) above the equilibrium price.C) either at or above the equilibrium price. D) at the equilibrium price.
Answer: A
24) An effective price floor must be set 24)A) at the equilibrium price. B) above the equilibrium price.C) below the equilibrium price. D) either at or below the equilibrium price.
Answer: B
4
25) For a particular product, an effective price ceiling results in 25)A) quantity demanded greater than quantity supplied.B) quantity supplied greater than quantity demanded.C) demand equal to supply.D) quantity demanded equal to quantity supplied.
Answer: A
26) For a particular product, an effective price floor results in 26)A) quantity supplied greater than quantity demanded.B) quantity demanded greater than quantity supplied.C) demand equal to supply.D) quantity demanded equal to quantity supplied.
Answer: A
Refer to the information provided in Figure 4.3 below to answer the questions that follow.
Figure 4.3
27) Refer to Figure 4.3. The government setting the price of pencils at $0.40 would be an example of aneffective
27)
A) price surplus. B) market equilibrium.C) price ceiling. D) price floor.
Answer: C
28) Refer to Figure 4.3. The government setting the price of pencils at $0.50 would be an example of aneffective
28)
A) price shortage. B) price floor.C) market equilibrium. D) price ceiling.
Answer: B
29) Refer to Figure 4.3. In the market for pencils, the quantity demanded will be greater than thequantity supplied if the government imposes an effective
29)
A) price surplus. B) price floor.C) price ceiling. D) market equilibrium price.
Answer: C
5
30) Refer to Figure 4.3. A non-price rationing system such as queuing must be used to ration theavailable supply of pencils if the government will not allow retailers to charge more than ________for a pencil.
30)
A) $0.40 B) $0.45 C) $0.50 D) $0.55Answer: A
31) Refer to Figure 4.3. Retailers will have an excess supply of pencils if the government will not allowretailers to charge less than ________ for a pencil.
31)
A) $0.50 B) $0.45C) $0.40 D) the equilibrium price
Answer: A
32) A shortage will occur if a ________ is set ________ the equilibrium price. 32)A) price floor; above B) price ceiling; belowC) price ceiling; above D) price floor; below
Answer: B
33) The market will be in equilibrium if ________ is set ________ the equilibrium price. 33)A) actual price; below B) a price ceiling; belowC) actual price; above D) a price floor; below
Answer: D
34) Quantity demanded will equal quantity supplied if a ________ is set ________ the equilibriumprice.
34)
A) price ceiling, at or below B) price ceiling; aboveC) price floor; above D) price ceiling; below
Answer: B
35) A surplus will occur if a ________ is set ________ the equilibrium price. 35)A) price floor; above B) price ceiling; belowC) price ceiling; above D) price floor; below
Answer: A
36) The government imposes a maximum price on apartments that is BELOW the equilibrium price.You accurately predict that
36)
A) the law will create a surplus of apartments.B) renters will find that landlords start offering to furnish the apartments.C) the law will have no economic impact.D) landlords are less likely to do routine maintenance work in the apartments.
Answer: D
37) The type of non-price rationing that most closely approaches the market outcome is 37)A) coupon rationing with coupons that cannot be resold.B) first-come, first-served basis or queuing.C) coupon rationing with coupons that can be resold.D) favored customer rationing.
Answer: C
6
38) The government imposes a price ceiling on heating oil that is below the market price. The rationingscheme that will minimize the misallocation of resources would be
38)
A) using rationing coupons that cannot be resold.B) using rationing on a first-come, first-served basis.C) using rationing only on weekdays.D) using rationing coupons that can be resold.
Answer: D
39) The government imposes a price floor on wheat that is below the market price. You are asked tosuggest a rationing scheme that will minimize the misallocation of resources. You suggest
39)
A) that no rationing system will be necessary.B) using rationing coupons that cannot be resold.C) using a queuing system to compensate for the excess demand.D) using rationing coupons that can be resold.
Answer: A
40) Laura is scalping tickets for a Laker's game. She can sell her tickets for at least a normal profit 40)A) when prices are too high.B) only when there is excess supply.C) any time the Lakers are popular.D) when the price set by the Lakers is less than the market equilibrium price.
Answer: D
41) Related to the Economics in Practice on p. 81: If the supply of lobsters increases and the demand forlobsters increases, the equilibrium price for lobsters ________ and the equilibrium quantity oflobsters ________.
41)
A) may increase, decrease, or stay the same; will increaseB) will decrease; may increase, decrease, or stay the sameC) may increase; decrease, or stay the same; may increase, decrease, or stay the sameD) will increase; will increase
Answer: A
42) Related to the Economics in Practice on p. 81: If the supply of lobsters increased and the equilibriumprice of lobsters increases, the demand for lobsters ________ and total revenue from the sale oflobsters ________.
42)
A) may have increased, decreased, or stayed the same; will increaseB) increased; may increase, decrease, or stay the sameC) increased; will increaseD) may have increased; decreased, or stayed the same; may increase, decrease, or stay the same
Answer: C
43) Related to the Economics in Practice on p. 87: The true cost of the Shakespeare in the Park tickets is 43)A) $0 plus the opportunity cost of the time spent in line.B) zero.C) the cost to put on the performance.D) the additional cost to the city of extra security.
Answer: A
7
44) Related to the Economics in Practice on p. 87: The initial price of $0 for the Shakespeare in the Parktickets is akin to the city of New York ________ the tickets.
44)
A) issuing ration coupons for B) issuing a price floor onC) assigning favored customer status for D) issuing a price ceiling on
Answer: D
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
45) Goods are allocated in a market system by nonprice rationing. 45)Answer: True False
46) In the short run, nonprice rationing will happen whenever there is excess demand in a market. 46)Answer: True False
47) When supply is fixed, price is demand determined. 47)Answer: True False
48) With nonprice rationing, those who are both able and willing to pay for a product necessarily getthe product.
48)
Answer: True False
49) Establishing a list of favored customers is an alternative rationing mechanism to price rationing. 49)Answer: True False
50) A surplus exists when there is excess demand in a market. 50)Answer: True False
51) In a "black market", goods are traded at the same prices as they would be in a normal market. 51)Answer: True False
52) Queuing is a system of nonprice rationing. 52)Answer: True False
53) Ration coupons are tickets or coupons that give someone a right to purchase a certain amount of aproduct during a specific period of time.
53)
Answer: True False
8
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Refer to the information provided in Figure 4.4 below to answer the questions that follow.
Figure 4.4
54) Refer to Figure 4.4. At the world price of ________ per barrel of oil, the United States imports 6million barrels of oil per day.
54)
A) $100 B) $125 C) $150 D) >$150Answer: B
55) Refer to Figure 4.4. The United States will import 2 million barrels of oil per day if a ________ perbarrel tax is levied on imported oil.
55)
A) $25 B) $50 C) $100 D) $150Answer: A
56) Refer to Figure 4.4. The price of oil in the United States would be $125 per barrel, and the UnitedStates would import 6 million barrels of oil per day if the United States levies ________ per barreltax on imported oil.
56)
A) no B) a $25 C) a $50 D) a $100Answer: A
57) Refer to Figure 4.4. Assume that initially there is free trade. The price of oil in the United States willincrease to $150 per barrel if the United States then imposes ________ tax per barrel of imported oil.
57)
A) no B) a $25 C) a $50 D) a $100Answer: B
58) Refer to Figure 4.4. Assume that initially there is free trade. Tax revenue of $ 50 million per day willbe generated if the United States imposes a ________ tax per barrel on imported oil.
58)
A) $25 B) $50 C) $100 D) $150Answer: A
59) Refer to Figure 4.4. Assume that initially there is free trade. If the United States allowed drilling formore oil in the Gulf of Mexico, it could
59)
A) decrease the demand for domestic oil. B) reduce the supply of domestic oil.C) increase the domestic price of oil. D) reduce U.S. oil imports without a tax.
Answer: D
9
Refer to the information provided in Figure 4.5 below to answer the questions that follow.
Figure 4.5
60) Refer to Figure 4.5. The United States imports 9 million CD-Rom drives at a world price of________ per CD-Rom drive.
60)
A) $15 B) $25C) between $15 and $25 D) >$25
Answer: A
61) Refer to Figure 4.5. The United States will import 3 million CD-Rom drives if ________ tax perCD-Rom drive is levied on imported CD-Rom drives.
61)
A) no B) a $10 C) a $15 D) a $25Answer: B
62) Refer to Figure 4.5. The price of CD-Rom drives in the United States would be $15 per CD-Romdrive, and the United States would import 9 million CD-Rom drives if the United States imposed________ tax per CD-Rom drive on imported CD-Rom drives.
62)
A) no B) a $10 C) a $15 D) a $25Answer: A
63) Refer to Figure 4.5. Assume that initially there is free trade. The quantity demanded of CD-Romdrives will be reduced by 3 million CD-Rom drives if the United States imposes ________ tax perCD-Rom drive on imported CD-Rom drives.
63)
A) no B) a $10 C) a $15 D) a $25Answer: B
64) Refer to Figure 4.5. Assume that initially there is free trade. The quantity of CD-Rom drivessupplied by U.S. firms will increase by 3 million CD-Rom drives if the United States then imposes________ tax per CD-Rom drive on imported CD-Rom drives.
64)
A) no B) a $10 C) a $15 D) a $25Answer: B
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
65) A U.S. import fee on steel would reduce imports and lower the price of U.S. steel products. 65)Answer: True False
10
66) A U.S. import fee on steel would increase the domestic quantity of steel demanded. 66)Answer: True False
67) A U.S. import fee on steel would increase the domestic quantity of steel supplied. 67)Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
68) The difference between current market price and full costs of production for the firm is known as 68)A) consumer surplus. B) market surplus.C) nonprice surplus. D) producer surplus.
Answer: D
69) The difference between the maximum a person is willing to pay and current market price is knownas
69)
A) market surplus. B) nonprice surplus.C) producer surplus. D) consumer surplus.
Answer: D
70) If the most someone is willing to pay for an airline ticket to Las Vegas is $300 and the market priceof the ticket is $200, then this buyer will get consumer surplus of
70)
A) $100. B) $200. C) $300. D) $500.Answer: A
71) The market price of a bowling ball is $125 and the full cost of producing it is $35, then a bowlingball producing firm gets producer surplus of
71)
A) $35. B) $90. C) $125. D) $160.Answer: B
11
Refer to the information provided in Figure 4.6 below to answer the questions that follow.Equilibrium in this market occurs at the intersection of curves S and D.
Figure 4.6
72) In figure 4.6 the area of [A + B + C] represents 72)A) consumer surplus minus producer surplus.B) consumer surplus.C) consumer surplus plus producer surplus.D) producer surplus.
Answer: B
73) In figure 4.6 the area of [E + F + G] represents 73)A) consumer surplus plus producer surplus.B) consumer surplus minus producer surplus.C) producer surplus.D) consumer surplus.
Answer: C
74) In figure 4.6, consumer surplus is area [A + B + E] if price is 74)A) P1. B) P2. C) P3. D) above P3.
Answer: A
75) In figure 4.6, producer surplus is area G if price is 75)A) below P1. B) P1. C) P2. D) P3.
Answer: B
76) In figure 4.6 the deadweight loss due to under production is area [C + F] if price is 76)A) P1. B) P2. C) P3. D) > P3.
Answer: A
77) In figure 4.6 producer surplus changes by the area [E + F] if price goes from equilibrium to 77)A) P1. B) P3. C) < P1. D) > P3.
Answer: A
12
78) In figure 4.6 consumer surplus changes by the area [E - C] if price goes from equilibrium to 78)A) P1. B) P3. C) < P1. D) > P3.
Answer: A
79) The total of consumer plus producer surplus is ________ at the market equilibrium. 79)A) negative B) smallest C) zero D) greatest
Answer: D
80) A deadweight loss occurs ________ in a market. 80)A) when there is efficient productionB) only when there is underproductionC) when there is underproduction or overproductionD) only when there is overproduction
Answer: D
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
81) Producer surplus is the difference between the most a person is willing to pay and market price. 81)Answer: True False
82) Producer surplus describes a situation in which there is excess quantity demanded. 82)Answer: True False
83) If someone is willing to pay $800 to go to the World Cup but can buy a ticket for $500, they will get$300 in consumer surplus.
83)
Answer: True False
84) A firm that sells a motorcycle for $15,000 also gets producer surplus of $15,000. 84)Answer: True False
85) The total of consumer plus producer surplus is at a minimum at the market equilibrium. 85)Answer: True False
86) The total of producer and consumer surplus is maximized when there is overproduction. 86)Answer: True False
![Untitled-4 []€¦ · Title: Untitled-4 Created Date: 6/16/2008 10:40:59 AM](https://static.documents.pub/doc/80x56/5f75f2217ef0ed5065693132/untitled-4-title-untitled-4-created-date-6162008-104059-am.jpg)
![Untitled-4 [] · Title: Untitled-4 Created Date: 11/3/2010 1:11:34 PM](https://static.documents.pub/doc/80x56/5fb7e0b4fbc45863435924d4/untitled-4-title-untitled-4-created-date-1132010-11134-pm.jpg)
![Untitled-3 [] · Title: Untitled-3 Created Date: 4/22/2015 4:24:02 PM](https://static.documents.pub/doc/80x56/5ec53dc74b1d8b1a074d5ff1/untitled-3-title-untitled-3-created-date-4222015-42402-pm.jpg)
![Untitled-4 [] · Title: Untitled-4 Created Date: 2/14/2020 3:10:13 PM](https://static.documents.pub/doc/80x56/5f59912105a8951d9d008ba6/untitled-4-title-untitled-4-created-date-2142020-31013-pm.jpg)
![Untitled-4 [dagskammtur.files.wordpress.com]€¦ · Title: Untitled-4 Author: dalli Created Date: 20101031161609Z](https://static.documents.pub/doc/80x56/6036010521c90150f85583bf/untitled-4-title-untitled-4-author-dalli-created-date-20101031161609z.jpg)
![Untitled-4 [fin.bus.ku.ac.th]](https://static.documents.pub/doc/80x56/6169f33011a7b741a34d2a10/untitled-4-finbuskuacth.jpg)
![Untitled-4 [] · Title: Untitled-4 Author: user Created Date: 2/4/2014 6:32:20 PM](https://static.documents.pub/doc/80x56/5f598de4698f683c2f454898/untitled-4-title-untitled-4-author-user-created-date-242014-63220-pm.jpg)
![Untitled-4 [bildungscentrumherford.de] · Title: Untitled-4 Created Date: 1/17/2012 4:02:38 PM](https://static.documents.pub/doc/80x56/5f7151a67dbfd9247873f34f/untitled-4-bi-title-untitled-4-created-date-1172012-40238-pm.jpg)
![Untitled-4 []€¦ · Title: Untitled-4 Created Date: 20010118105640Z](https://static.documents.pub/doc/80x56/5f3a754b18331565233da53a/untitled-4-title-untitled-4-created-date-20010118105640z.jpg)
![Untitled-4 [] · Title: Untitled-4 Created Date: 11/25/2010 4:46:30 PM](https://static.documents.pub/doc/80x56/5fb7a6442716c4449436063b/untitled-4-title-untitled-4-created-date-11252010-44630-pm.jpg)
![Untitled-4 [] · Title: Untitled-4 Author: design_3 Subject: Untitled-4 Created Date: 3/7/2003 2:31:32 PM](https://static.documents.pub/doc/80x56/60198ad59bead8402a4fda80/untitled-4-title-untitled-4-author-design3-subject-untitled-4-created-date.jpg)
![Untitled-4 []€¦ · Title: Untitled-4 Created Date: 2/19/2014 5:43:03 PM](https://static.documents.pub/doc/80x56/5f3a754a18331565233da537/untitled-4-title-untitled-4-created-date-2192014-54303-pm.jpg)
![Untitled-4 [] · Title: Untitled-4 Created Date: 2/26/2018 6:32:03 PM](https://static.documents.pub/doc/80x56/5aecde047f8b9a66258f2667/untitled-4-untitled-4-created-date-2262018-63203-pm.jpg)
![Untitled-4 [images.collegedunia.com] · 2019-01-23 · Title: Untitled-4 Author: k-5 Subject: Untitled-4 Created Date: 7/27/2004 9:58:56 AM](https://static.documents.pub/doc/80x56/5fa9d1633357f7557846b16d/untitled-4-2019-01-23-title-untitled-4-author-k-5-subject-untitled-4-created.jpg)