Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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1.
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What happens when wages are set above the equilibrium level by law?
a. | Firms tend to try to break the law and hire people at the equilibrium
level. | b. | Firms employ more workers than they would at the equilibrium
wage. | c. | Firms employ fewer workers than they would at the equilibrium
wage. | d. | Firms hire more workers but for fewer hours than they would at the equilibrium
wage. |
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2.
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On which kinds of goods do governments generally place price ceilings?
a. | those that are cheap but could become more expensive without the
ceiling | b. | those that are not necessary but have become customary | c. | those that are
essential and cheap | d. | those that are essential but too expensive for
some consumers |
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3.
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When buyers will purchase exactly as much as sellers are willing to sell, what
is the condition that has been reached?
a. | supply and demand | c. | equilibrium | b. | excess demand | d. | price floor |
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4.
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Which of the following is an example of a good whose price goes down because of
improvements in technology?
a. | computer printers | c. | hard-bound books | b. | running shoes | d. | typewriters |
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5.
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What happens when the supply of a nonperishable good is greater than the
consumer wants to buy?
a. | the good is discarded | b. | the good becomes a luxury and the price
rises | c. | either the good remains unsold or the price drops | d. | either the good is
saved for later sale or the price is raised |
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6.
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Why did Communist governments use a command economic system for many
years?
a. | as a way to avoid the expense and difficulties of a free market | b. | in an attempt to
create a society in which everyone was equal | c. | to limit the costs of production of many
goods | d. | as a method of keeping the consumer from getting what he or she
wanted |
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7.
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Why did the U.S. government use rationing for some foods and consumer goods
during World War II?
a. | to guarantee each civilian a minimum standard of living in
wartime | b. | to keep sellers from raising prices on necessary goods | c. | because the English
government had also decided on rationing | d. | to earn more money to support the
military |
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8.
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Which of the following is a situation that makes the market behave
inefficiently?
a. | when consumers do not have enough information to make good
choices | b. | when producers have the power to find out exactly what to produce | c. | when both consumers
and producers are fully informed about a product | d. | when the market is in perfect competition and
prices are high |
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9.
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What happens to a market in equilibrium when there is an increase in
supply?
a. | Excess supply means that producers will make less of the good. | b. | Quantity demanded
will exceed quantity supplied, so the price will drop. | c. | Quantity supplied will exceed quantity
demanded, so the price will drop. | d. | Undersupply means that the good will become
very expensive. |
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10.
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What is it called when the government uses some tool other than money to
allocate goods?
a. | supply management | c. | disequilibrium | b. | rationing | d. | resource
allocation |
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11.
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What is the name of the smallest amount that can legally be paid to most workers
for an hour of work?
a. | equilibrium price | c. | price floor | b. | supply cost | d. | minimum wage |
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12.
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The price ceiling that was used to control the price of housing in New York City
and other cities was called which of the following?
a. | rent control | c. | housing control | b. | rent abatement | d. | equilibrium
price |
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13.
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In response to rising car traffic, demand for bicycles has increased. The new
equilibrium point will show
a. | more bicycles sold, but at a higher price. | b. | fewer bicycles sold,
but at a higher price. | c. | more bicycles sold, but at a lower
price. | d. | fewer bicycles sold, but at a higher price. |
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14.
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Which of these is most likely to lead directly to a black market?
a. | a supply shock | c. | rationing | b. | a price floor | d. | equilibrium |
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15.
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Rent control is a type of
a. | price ceiling. | c. | rationing. | b. | price floor. | d. | surplus. |
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16.
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Elena is looking for an apartment. Which of the following is an example of her
search costs?
a. | Elena must pay the first and last months’ rent before she can move into a new
apartment. | b. | Elena pays movers $400 to help her transfer her belongings to the new
apartment. | c. | Elena misses two days of work at the supermarket to visit several different
apartments available for rent. | d. | Elena pays $300 to stay at a hotel for four
nights before the apartment is ready. |
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17.
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A shortage will develop when
a. | the quantity supplied of a good is greater than the quantity demanded of that
good. | b. | the equilibrium quantity supplied is lower than the actual quantity
supplied. | c. | the government provides subsidies to producers. | d. | the market price is
below the equilibrium price. |
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18.
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In a free market, prices lead to an efficient allocation of resources. In other
words,
a. | consumers can buy unlimited amounts of any good they like at a price of their
choice. | b. | resources are used in the most valuable and productive way according to the needs of
consumers and producers. | c. | the government decides who controls natural
resources. | d. | people who own resources are unable to bargain with people who wish to buy
resources. |
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19.
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Why do fads often lead to shortages, at least in the short term?
a. | Buyers and sellers are unable to agree on a price for the good. | b. | Laws prevent stores
from responding to excess demand in time to prevent a shortage. | c. | Manufacturers charge
extremely high prices for the goods that stores are unwilling to pay. | d. | Demand increases so
quickly and unexpectedly that time is needed for the quantity supplied and price to increase to reach
a new equilibrium point. |
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20.
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Technological process has reduced the cost of manufacturing MP3 players. If
demand is unchanged,
a. | more MP3 players will be sold at a higher price. | b. | fewer MP3 players
will be sold at a higher price. | c. | more MP3 players will be sold at a lower
price. | d. | fewer MP3 players will be sold at a higher price. |
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21.
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According to Figure 6.2, in this market, a price of $1.00 would be
a. | the equilibrium price. | c. | a price ceiling. | b. | a price floor. | d. | a subsidy. |
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22.
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According to Figure 6.2, in this market, a price of $1.50 would be
a. | the equilibrium price. | c. | a price ceiling. | b. | a price floor. | d. | a subsidy. |
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23.
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According to Figure 6.2, at the equilibrium price, how many slices of pizza will
be sold?
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24.
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If the government set a price of $2.00 a slice, how many slices of pizza will be
sold each day, according to Figure 6.2?
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25.
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The price of a slice of pizza is $2.50. At the end of the day, how many unsold
slices of pizza will be left, according to Figure 6.2?
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26.
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A new office building has opened and the demand for pizza has increased. The new
demand curve states that consumers will buy 200 slices at $2.50 each and 300 slices at $1.50 each.
Based on Figure 6.2, if the slope of the curve has not changed, what is the new equilibrium price and
quantity supplied?
a. | $1.00, 300 slices | c. | $2.00, 250 slices | b. | $1.50, 200 slices | d. | $2.00, 150
slices |
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27.
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Based on Figure 6.2, what is a possible equilibrium point in this market after
it has been affected by a supply shock?
a. | $1.00, 100 slices | c. | $1.50, 200 slices | b. | $1.50, 100 slices | d. | $2.00, 150
slices |
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Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | supply shock | f. | disequilibrium | b. | shortage | g. | minimum wage | c. | excess supply | h. | price floor | d. | spillover
costs | i. | price
ceiling | e. | search costs | j. | rent control |
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28.
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the smallest amount, by law, that can be paid to a worker for an hour of
labor
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29.
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a maximum amount that can be legally charged for a good or service
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30.
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a sudden lack of goods
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31.
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when quantity supplied is more than quantity demanded
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32.
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situation in which quantity demanded is greater than quantity supplied
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33.
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a price ceiling placed on the amount people pay for housing
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34.
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the financial and opportunity costs consumers pay when looking for a good or
service
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35.
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when quantity supplied and quantity demanded are not the same in a
market
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Identifying Key Terms
Match each term with the correct
statement below. a. | rationing | f. | disequilibrium | b. | price
ceiling | g. | search
costs | c. | excess demand | h. | supply shock | d. | surplus | i. | spillover costs | e. | equilibrium | j. | price floor |
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36.
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a sudden lack of availability of a good
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37.
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costs of production that affect people who have no control over how much of a
good is produced
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38.
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when quantity demanded is more than quantity supplied
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39.
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situation in which quantity supplied is greater than quantity demanded
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40.
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a minimum price for a good or service
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41.
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a system of allocating scarce goods and services using some criteria other than
price
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42.
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the point at which quantity supplied and quantity demanded are the same
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43.
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the financial and opportunity costs consumers pay when looking for a good or
service
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