Principles and Applications of Economics International Edition 6th Edition by Marc Lieberman – Test Bank
CHAPTER 4—WORKING WITH SUPPLY AND DEMAND
MULTIPLE CHOICE
1.A government-imposed price ceiling set below the market’s equilibrium price will create an excess demand for a product. As a result of the excess demand, either the demand curve will tend to shift to the left or the supply curve will shift to the right-or both.
|
a. |
True |
|
b. |
False |
ANS:BPTS:1DIF:Difficulty: Moderate
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Comprehension
2.A government-imposed price ceiling set below the market’s equilibrium price for a good will produce an excess supply of the good.
|
a. |
True |
|
b. |
False |
ANS:BPTS:1DIF:Difficulty: Moderate
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Comprehension
|
Figure 4-1 |
||
|
Price Per Pair |
Quantity Demanded |
Quantity Supplied |
|
$ 2 |
18 |
3 |
|
$ 4 |
14 |
4 |
|
$ 6 |
10 |
5 |
|
$ 8 |
6 |
6 |
|
$10 |
2 |
8 |
3.Figure 4-1 shows the supply and demand for socks. If a price ceiling of $10 per pair is imposed by the government, the number of pairs actually purchased will be
|
a. |
2 pairs |
|
b. |
8 pairs |
|
c. |
5 pairs |
|
d. |
1 pair |
|
e. |
6 pairs |
ANS: E PTS: 1 DIF: Difficulty: Challenging
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Application
4.Figure 4-1 shows the supply and demand for socks. If a price floor of $10 per pair is imposed by the government, the number of pairs actually purchased will be
|
a. |
2 pairs |
|
b. |
8 pairs |
|
c. |
5 pairs |
|
d. |
1 pair |
|
e. |
6 pairs |
ANS: A PTS: 1 DIF: Difficulty: Challenging
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Application
5.Figure 4-1 shows the supply and demand for socks. If a price ceiling of $4 per pair is imposed by the government, the number of pairs actually purchased will be
|
a. |
4 pairs |
|
b. |
8 pairs |
|
c. |
5 pairs |
|
d. |
1 pair |
|
e. |
6 pairs |
ANS: A PTS: 1 DIF: Difficulty: Challenging
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Application
6.Figure 4-1 shows the supply and demand for socks. If a price ceiling of $4 per pair is imposed by the government
|
a. |
there will be a shortage of 14 pairs of socks |
|
b. |
there will be a shortage of 10 pairs of socks |
|
c. |
there will be neither a shortage nor a surplus of socks |
|
d. |
there will be a surplus of 10 pairs of socks |
|
e. |
there will be a surplus of 14 pairs of socks |
ANS: B PTS: 1 DIF: Difficulty: Challenging
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Application
7.Figure 4-1 shows the supply and demand for socks. If a price floor of $10 per pair is imposed by the government
|
a. |
there will be a shortage of 14 pairs of socks |
|
b. |
there will be a shortage of 10 pairs of socks |
|
c. |
there will be neither a shortage nor a surplus of socks |
|
d. |
there will be a surplus of 6 pairs of socks |
|
e. |
there will be a surplus of 14 pairs of socks |
ANS: D PTS: 1 DIF: Difficulty: Challenging
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Application
8.Rent control is an example of a price ceiling. Which of the following problems must be addressed under a rent control program?
|
a. |
what to do with the surplus of rental units |
|
b. |
how to subsidize renters so that they can afford to pay the higher rents |
|
c. |
how to decrease the quantity of rental units to the equilibrium level |
|
d. |
whether the opportunity cost of rental units equals the competitive market price |
|
e. |
how to allocate scarce rental units |
ANS:EPTS:1DIF:Difficulty: Moderate
NAT: BUSPROG: Analytic STA: DISC: Supply and demand
TOP: Government Intervention in Markets KEY: Bloom’s: Evaluation
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