Question 1

We can be sure that the equilibrium price will fall when:

Accepted Answer

A)  ​supply and demand both increase.
B)  ​supply and demand both decrease.
C)  ​supply increases and demand decreases.
D)  ​supply decreases and demand increases.E) None of the above
F) B) and C)

Question 2

Which of the following could be responsible for an increase in the price of wheat?

Accepted Answer

A)  ​an increase in the supply of wheat
B)  ​an increase in the demand for wheat
C)  ​a decrease in the demand for wheat
D)  ​a simultaneous increase in supply and decrease in demand for wheatE) A) and C)
F) None of the above

Question 3

If a price ceiling is a binding constraint on a market, then

Accepted Answer

A)  ​the equilibrium price must be below the price ceiling.
B)  ​the quantity supplied must exceed the quantity demanded.
C)  ​sellers cannot sell all they want to sell at the price ceiling.
D)  ​buyers cannot buy all they want to buy at the price ceiling.E) A) and B)
F) All of the above

Question 4

When the supply of a good increases and its demand decreases by the same amount:

Accepted Answer

A)  ​Price will change in the same direction as the shift in supply.
B)  ​Price will change in the same direction as the shift in demand.
C)  ​Quantity exchanged will change in the same direction as the shift in supply.
D)  ​Quantity exchanged will change in the same direction as the shift in demand.E) None of the above
F) A) and B)

Question 5

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) B) and D)
F) None of the above

Question 6

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A)  ​results in a surplus.
B)  ​is set above the equilibrium price.
C)  ​causes quantity demanded to exceed quantity supplied.
D)  ​All of the above are correct.E) B) and D)
F) B) and C)

Question 7

In general, an increase in price could be caused by either:

Accepted Answer

A)  ​an increase in demand or a decrease in supply.
B)  ​an increase in demand or an increase in supply.
C)  ​a decrease in demand or an increase in supply.
D)  ​a decrease in demand or a decrease in supply.E) B) and D)
F) None of the above

Question 8

Which of the following is an example of an unintended consequence?

Accepted Answer

A)  ​government sponsored ad campaigns that lead to an increase in vaccinations
B)  ​rent controls that lead to a decline in the quality of rental properties
C)  ​higher property taxes that allow for better public schools
D)  ​increased airport security measures that result in safer travelE) B) and C)
F) A) and D)

Question 9

An increase in supply will cause a shortage at the original market price.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following could not cause an increase in both the equilibrium price and quantity of a good exchanged?

Accepted Answer

A)  ​Increased input prices.
B)  ​Decreased incomes for an inferior good.
C)  ​An increase in the price of a substitute good.
D)  ​Increased tastes for the good.E) None of the above
F) A) and D)

Question 11

Suppose there is a reduction in consumer income and an increase in the price of jet fuel, an important resource used to produce air travel. If air travel is a normal good, how will these changes influence the price and quantity of air travel? The price of air travel will (be)  ____ and quantity purchased will (be)  ____.

Accepted Answer

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

Question 12

An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply.

Accepted Answer

A) True 
 B)False

Question 13

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 14

A price floor is binding when it is set

Accepted Answer

A)  ​above the equilibrium price, causing a shortage.
B)  ​above the equilibrium price, causing a surplus.
C)  ​below the equilibrium price, causing a shortage.
D)  ​below the equilibrium price, causing a surplus.E) A) and D)
F) None of the above

Question 15

An increase in demand will cause a shortage at the original market price.

Accepted Answer

A) True 
 B)False

Question 16

Either a price floor or a price ceiling will result in a smaller quantity exchanged than if the price was at its equilibrium level.

Accepted Answer

A) True 
 B)False

Question 17

A price ceiling set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 18

If tastes for a good decreased and the price of a substitute good decreased at the same time, as a result:

Accepted Answer

A)  ​prices would rise.
B)  ​prices would fall.
C)  ​larger quantities to be exchanged.
D)  ​we would not know which direction either prices or quantities exchanged would be altered without more information.E) A) and D)
F) A) and C)

Question 19

In the market for natural gas, a particularly mild winter will lead to:

Accepted Answer

A)  ​a decrease in the demand and an increase in both equilibrium price and quantity.
B)  ​an increase in the supply and an increase in both equilibrium price and quantity.
C)  ​an increase in the supply, a decrease in equilibrium price, and an increase in equilibrium quantity.
D)  ​a decrease in the demand and a decrease in both equilibrium price and quantity.E) A) and C)
F) None of the above

Question 20

Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke)  rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n) :

Accepted Answer

A)  ​decrease in supply.
B)  ​decrease in demand.
C)  ​increase in supply.
D)  ​increase in demand.E) C) and D)
F) A) and D)

Exam 5: Market in Motion and Price Controls

Correct Answer
verified

In the market for natural gas, a particularly mild winter will lead to:

Correct Answer
verified

Which of the following could be responsible for an increase in the price of wheat?

Correct Answer
verified

If a price ceiling is a binding constraint on a market, then

Correct Answer
verified

We can be sure that the equilibrium price will fall when:

Correct Answer
verified

If tastes for a good decreased and the price of a substitute good decreased at the same time, as a result:

Correct Answer
verified

When the supply of a good increases and its demand decreases by the same amount:

Correct Answer
verified

A price floor is binding when it is set

Correct Answer
verified

To say that a price ceiling is nonbinding is to say that the price ceiling

Correct Answer
verified

Which of the following is an example of an unintended consequence?

Correct Answer
verified

A price ceiling set below the equilibrium price is nonbinding.

Correct Answer
verified

Which of the following could not cause an increase in both the equilibrium price and quantity of a good exchanged?

Correct Answer
verified

An increase in supply will cause a shortage at the original market price.

Correct Answer
verified

A price ceiling set above the equilibrium price is not binding.

Correct Answer
verified

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

Correct Answer
verified

In general, an increase in price could be caused by either:

Correct Answer
verified

An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply.

Correct Answer
verified

Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n) :

Correct Answer
verified

Either a price floor or a price ceiling will result in a smaller quantity exchanged than if the price was at its equilibrium level.

Correct Answer
verified

An increase in demand will cause a shortage at the original market price.

Correct Answer
verified

Exam 5: Market in Motion and Price Controls

Correct AnswerverifiedShow Answer

In the market for natural gas, a particularly mild winter will lead to:

Correct AnswerverifiedShow Answer

Which of the following could be responsible for an increase in the price of wheat?

Correct AnswerverifiedShow Answer

If a price ceiling is a binding constraint on a market, then

Correct AnswerverifiedShow Answer

We can be sure that the equilibrium price will fall when:

Correct AnswerverifiedShow Answer

If tastes for a good decreased and the price of a substitute good decreased at the same time, as a result:

Correct AnswerverifiedShow Answer

When the supply of a good increases and its demand decreases by the same amount:

Correct AnswerverifiedShow Answer

A price floor is binding when it is set

Correct AnswerverifiedShow Answer

To say that a price ceiling is nonbinding is to say that the price ceiling

Correct AnswerverifiedShow Answer

Which of the following is an example of an unintended consequence?

Correct AnswerverifiedShow Answer

A price ceiling set below the equilibrium price is nonbinding.

Correct AnswerverifiedShow Answer

Which of the following could not cause an increase in both the equilibrium price and quantity of a good exchanged?

Correct AnswerverifiedShow Answer

An increase in supply will cause a shortage at the original market price.

Correct AnswerverifiedShow Answer

A price ceiling set above the equilibrium price is not binding.

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

In general, an increase in price could be caused by either:

Correct AnswerverifiedShow Answer

An increase in the equilibrium price and the equilibrium quantity would be caused by an increase in supply.

Correct AnswerverifiedShow Answer

Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n) :

Correct AnswerverifiedShow Answer

Either a price floor or a price ceiling will result in a smaller quantity exchanged than if the price was at its equilibrium level.

Correct AnswerverifiedShow Answer

An increase in demand will cause a shortage at the original market price.

Correct AnswerverifiedShow Answer

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