Question 1

Price controls are usually enacted

Accepted Answer

when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Answer

when policymakers detect inefficiencies in a market.

Answer

as a means of raising revenue for public purposes.

Question 2

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

Accepted Answer

<P>ceiling.</P>

Answer

stabilization.

Answer

<P>floor.</P>

Question 3

A price floor

Accepted Answer

All the above are correct.

Answer

can result when sellers of a good are successful in their attempts to convince the government that the market outcome without a price floor is unfair to them.

Answer

can create inequities in a market.

Answer

is a legal minimum on the price at which a good can be sold.

Question 4

A price ceiling will be binding only if it is set

Accepted Answer

below equilibrium price.

Answer

above equilibrium price.

Answer

equal to equilibrium price.

Question 5

Suppose that a price ceiling is not binding; this means that

Accepted Answer

the equilibrium price is below the price ceiling.

Answer

the equilibrium price is above the price ceiling.

Question 6

A shortage results when

Accepted Answer

a binding price ceiling is imposed.

Answer

a price ceiling is imposed but it is not binding.

Answer

a binding price floor is imposed

Question 7

Which of the following is a correct statement about the labor market?

Accepted Answer

Workers determine the supply of labor, and firms determine the demand for labor.

Answer

Workers determine the supply of labor, and the government determines the demand for labor.

Answer

Workers determine the demand for labor, and firms determine the supply of labor.

Question 8

At a minimum wage that exceeds the equilibrium wage,

Accepted Answer

the quantity supplied of labor will exceed the quantity demanded.

Answer

the market for skilled workers is affected, but the market for unskilled workers remains unaffected.

Answer

the quantity demanded of labor will exceed the quantity supplied.

Answer

the minimum wage will not be binding.

Question 9

In which of these cases will the tax burden fall most heavily on buyers of the good?

Accepted Answer

The demand curve is relatively steep and the supply curve is relatively flat.

Answer

The demand curve and the supply curve are both relatively flat.

Answer

The demand curve and the supply curve are both relatively steep.

Answer

The demand curve is relatively flat and the supply curve is relatively steep.

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