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Chapter 04
ECON Chapter 04 Study Questions
| Question | Answer |
|---|---|
| A price ceiling is a government-mandated | maximum price above which legal trades cannot be made. |
| Suppose the government imposes a price ceiling above the equilibrium price of a given good. Which of the following is the most likely result? | No change will occur in the market. |
| Jake is an excellent barber. However, all customers who come to him for a haircut must buy a bottle of shampoo. This type of arrangement is known as | a tie-in sale. |
| Refer to Exhibit 4-1. How many fewer units are exchanged because of the price ceiling than ultimately would be exchanged in a free market? | 50 |
| Which of the following statements is true? | Price ceilings set below the equilibrium price cause shortages. |
| A price floor is a government-mandated | minimum price below which legal trades cannot be made. |
| Suppose the government sets a price floor that is above the equilibrium price for a given good. It can be said that at the price floor, | although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire. |
| Exhibit 4-2 represents the orange juice market. The horizontal line represents a price ceiling imposed by the government. Which of the following is true? | The quantity supplied at the price ceiling will equal the quantity sold. |
| Exhibit 4-2 represents the orange juice market. The horizontal line at $2 shows a price ceiling imposed by the government. Which of the following statements is true at this price? | At the price ceiling the shortage equals 400 units. |
| A price floor set above the equilibrium price will | result in a surplus of the good. |
| Refer to Exhibit 4-3. If price P1 is a price ceiling, then | both b and c. (b there is a shortage in this market. c. it is the highest price that can legally be charged in this market.) |
| If the price of good X is $50 and the price of good Y is $25, it follows that the relative price of one unit of good X is _____________ unit(s) of good Y. | 2.00 |
| Refer to Exhibit 4-6. At a wage of $7, there will be a __________ of unskilled workers equal to __________ thousand workers. | surplus; 20 |
| Refer to Exhibit 4-6. Suppose the minimum wage is set at $5. The result will be | no effect on the unskilled labor market. |
| If goods are not rationed according to price, if follows that | some mechanism will be used to ration the goods. |
| The minimum wage is an example of a | price floor. |
| Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $15. The number of units that would be exchanged in this market would be | 150, since that is the equilibrium quantity and the price ceiling is above the equilibrium price |
| Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $10. The number of units that would be exchanged in this market would be | 90, since that is the number of units supplied at the price ceiling (and the quantity supplied is less than the quantity demanded). |
| Price serves as a | all of the above |
| When the price of a good rises, the price is transmitting information indicating that the good is relatively | scarcer. |
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