ECO 405 Week 3 Quiz Strayer

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Chapter 02Economic Systems, Resource Allocation, And Social Well-Being: Lessons From China's Transition

Multiple Choice Questions1.Which Of The Following Descriptions Fits The American Economy Best?A.A Pure Market EconomyB.A Mixed EconomyC.Purely Competitive EconomyD.A Command EconomyE.A Monopoly Economy2.In A Market Economy,A.Resources Are Allocated By The Private Parties Who Own The ResourcesB.Resources Are Allocated By The Various Local, State, And Federal Planning Committees And Zoning CommissionsC.Shortages Never ExistD.Surpluses Never ExistE.Both C) And D)3.In 1978, The Chinese EconomyA.Opened Ties To The Noncommunist WorldB.Became A Strictly Centralized Economy Under Joseph StalinC.Became Communist Under Mao ZedongD.Moved To The Island Of TaiwanE.Became A Purely Market-Oriented Economy4.In Both The U.S. And Canada, Most, But Not All, Of Economic Resources Are Owned And Controlled By Private Parties Who Make Decisions As To How To Use Those Resources With Somewhat Limited Interference From Government. As Such, These Economies Are Examples OfA.The Pure Command EconomyB.Mixed Economies, Though Closer To The Market End Of The SpectrumC.Mixed Economies, Though Closer To The Command End Of The SpectrumD.The Pure Market EconomyE.The Communist Economy

5.In The Market Economy, Markets Serve The Function OfA.Coordinating Resource Use Decisions Made By Individual Owners Of ResourcesB.Bringing About Resource Allocation Changes Desired By Resource OwnersC.Determining PricesD.All Of The AboveE.Both (A) And (B)6.Which Of The Following Is Least Consistent With The Pure Market Economy?A.An Established Legal System That Arbitrates Contract DisputesB.An Individual Accepting A Job For $1 Per HourC.The Institution Of Private Property RightsD.The Existence Of A Minimum WageE.Private Property Rights7.Which Of The Following Is Not A Characteristic Of A Purely Competitive Market?A.Enough Sellers And Buyers So That No One Of Them Acting Alone Can Influence The Price Of This ProductB.The Ability Of A Single Seller To Block Potential Competitors Out Of The MarketC.Freedom Of The Price To Move Up Or Down, That Is, No Price FixingD.Mobility Of Buyers And SellersE.A Standardized Product8.A Market With Only One Seller Of A Product That Has No Good Substitutes Is CalledA.A Pure MonopolyB.A Pure Command EconomyC.Purely CompetitiveD.Imperfectly CompetitiveE.An Oligopoly9.Which Of The Following Is Of Monopoly Firms? TheyA.Can Manipulate The Price Of Their ProductB.Beat Their Competitors' PricesC.Must Constantly Deal With The Entry Of New FirmsD.Never Receive Government Help Blocking Entry Into The MarketE.Do All Of The Above

10.Markets That Fall Between Pure Competition And Monopoly Are Called:A.Anti-CompetitiveB.Imperfectly CompetitiveC.Command MarketsD.Tweener MarketsE.Monopsonistic11.If A Consumer Always Eats Cheese With Macaroni, Then For That Consumer Macaroni And Cheese Are Examples Of:A.SubstitutesB.ComplementsC.Normal GoodsD.Inferior GoodsE.Standardized Products12.If An Increase In The Price Of Cookies Leads To A Decrease In The Demand For Ice Cream, Then Ice Cream And Cookies Must BeA.SubstitutesB.ComplementsC.Normal GoodsD.Inferior GoodsE.Standardized Products13.If An Increase In The Price Of Bicycles Leads To An Increase In The Demand For Bus Transportation, The Bicycles And Bus Rides Must BeA.SubstitutesB.ComplementsC.Normal GoodsD.Inferior GoodsE.Standardized Products

14.A Student Graduates From College And Gets A High-Paying Job. As A Result Of The Increase In Income, The Student Buys More Frozen Pizzas. For The Student, Frozen Pizzas Must Be A(N)A.SubstituteB.ComplementC.Normal GoodD.Inferior GoodE.Standardized Product15.You Receive A Big Raise At Work. As A Result Of Your Now Higher Income, You Stop Bringing Your Lunch From Home And Start Eating Lunch At A Nearby Restaurant. Your Homemade Lunches Must BeA.A SubstituteB.A ComplementC.Normal GoodsD.Inferior GoodsE.Standardized Products16.The Law Of Demand States That Price AndA.Demand Are Positively RelatedB.Quantity Demanded Are Positively RelatedC.Demand Are Negatively RelatedD.Quantity Demanded Are Negatively RelatedE.None Of The Above17.The Law Of Supply States That Price AndA.Supply Are Positively RelatedB.Quantity Supplied Are Positively RelatedC.Supply Are Negatively RelatedD.Quantity Supplied Are Negatively RelatedE.Quantity Demanded Are Negatively Related

18.An Increase In The Price Of A Good Will Cause Which Of The Following?A.Quantity Demanded To Demand To RiseB.Demand To FallC.Quantity Supplied To FallD.Supply To RiseE.None Of The Above19.Which Of The Following Will Cause Demand To Rise?A.A Decrease In PriceB.A Decrease In The Price Of A Substitute GoodC.A Decrease In The Price Of A Complementary GoodD.An Increase In SupplyE.An Increase In The Cost Of Production20.Given A Downward-Sloping Demand Curve And An Upward-Sloping Supply Curve, An Increase In Supply Together With An Increase In Demand Will Cause TheA.Equilibrium Quantity Purchased To Increase, But The Effect On Price Will Be IndeterminateB.Equilibrium Quantity Purchased To Decrease, But The Effect On Price Will Be IndeterminateC.Price To Rise, But The Effect On The Equilibrium Quantity Purchased Will Be IndeterminateD.Price To Fall, But The Effect On The Quantity Bought And Sold Will Be IndeterminateE.Equilibrium Price To Rise And The Equilibrium Quantity Purchased Will Rise21.A Situation In Which The Demand For A Product Is Decreasing While The Price Is Simultaneously Increasing Can Be Explained ByA.A Decrease In SupplyB.An Increase In SupplyC.Unchanged SupplyD.All Of The AboveE.None Of The Above

Questions 22 - 24 Refer To The Graph Below.22.At Price P1 There Is AA.Surplus Of X1x2B.Shortage Of X1x2C.Surplus Of Xx2D.Surplus Of AbE.Shortage Of X1x23.At A Price Of P1, What Quantity Will Be Sold In The Market?A.0B.XC.X1D.X2E.X1x224.If The Market Is In Equilibrium, The Price And Quantity Will BeA.P1 And X1B.P And X1C.P1 And XD.P And XE.P And X2

Questions 25 - 30 Refer To The Graph Below.25.The Demand Curve And Supply Curve For Beef Are Dd And Ss. The Demand Curve Shifts To D1d1 And A Price Ceiling Is Placed On Beef At Price P. The Result Will BeA.A Surplus Equal To X1xB.A Shift In The Supply Curve To S1s1C.An Increase In The Quantity Placed On The Market To X1D.Both (B) And (C) AboveE.A Shortage Equal To X1x26.The Demand Curve And Supply Curve For Beef Are Dd And Ss. Which Of The Following Could Not Cause Demand To Shift To D1d1?A.An Increase In The Price Of A Substitute GoodB.An Increase In The Price Of A Complementary GoodC.An Increase In Consumer IncomeD.A Change In Consumer TastesE.A Change In Consumer Expectations

27.The Demand Curve And Supply Curve For Beef Are Dd And Ss. Which Of The Following Could Cause Supply To Shift To S1s1?A.An Increase In The Cost Of ProductionB.A Decrease In The Cost Of ProductionC.An Increase In The Price Of A Substitute In ProductionD.An Increase In IncomeE.All Of The Above28.Which Of The Following Statements Is Incorrect?A.If Supply Decreases And Demand Remains Constant, Equilibrium Price Will RiseB.If Demand Decreases And Supply Increases, Equilibrium Price Will RiseC.If Supply Increases And Demand Decreases, Equilibrium Price Will FallD.If Demand Increases And Supply Decreases, Equilibrium Price Will RiseE.If Supply Is Constant And Demand Increases, Price Will Rise29.If Demand And Supply Shift To D1d1 And S1s1, Market Price Will BeA.PB.Above PC.Below PD.IndeterminateE.The Price That Goes With The Quantity X30.Which Of The Following Will Cause A Change In The Demand For Beer?A.A Change In The Average Income In The EconomyB.A Change In The Price Of Hops (Used To Make Beer)C.A Change In The Price Of BeerD.All Of The AboveE.None Of The Above

31.The Law Of Demand Suggests ThatA.Higher Prices Automatically Result In Higher ProfitsB.Demand Determines SupplyC.The Lower The Price Of A Product, The More Consumers Will Wish To Purchase, Other Things EqualD.Without Laws, Markets Would Not Reach EquilibriumE.Both (A) And (C)32.A Change In The Quantity Supplied Of A Good May Be Caused ByA.A Change In TechnologyB.A Change In The Number Of Firms Selling The GoodC.A Change In The Price Of The GoodD.A Change In The Demand For The GoodE.Either (C) Or (D)Questions 33 - 37 Refer To The Graph Below.

33.Equilibrium Price And Quantity AreA.20 And 100B.20 And 200C.15 And 300D.15 And 200E.10 And 20034.A Price Of $10 Will Lead To AA.Shortage Of 200B.Surplus Of 200C.Shortage Of 100D.Surplus Of 100E.Surplus Of 30035.A Price Of $20 Will Lead To AA.Shortage Of 200B.Surplus Of 200C.Shortage Of 100D.Surplus Of 100E.Surplus Of 30036.When Price Is $10, How Much Will Be Sold In The Market?A.0B.100C.200D.300E.It Can Not Be Determined37.Which Of The Following Could Lead To A Price Of $20 In The Market?A.An Increase In DemandB.A Decrease In SupplyC.A Decrease In DemandD.An Increase In SupplyE.An Increase In Both Supply And Demand

Questions 38 - 43 Refer To The Graph Below.38.If The Market Starts In Equilibrium With D1 And S1, Price And Quantity AreA.13 And 55B.10 And 40C.10 And 65D.7 And 55E.10 And 5539.If The Market Starts In Equilibrium With D1 And S1, And The Price Of Pepsi Increases, The New Equilibrium Price And Quantity AreA.13 And 55B.10 And 40C.10 And 65D.7 And 55E.10 And 5540.If The Market Starts In Equilibrium With D1 And S1, And The Price Of Carbonated Water (The Main Ingredient In Dr. Pepper) Increases, The New Equilibrium Price And Quantity AreA.13 And 55B.10 And 40C.10 And 65D.7 And 55E.10 And 55

41.If The Market Starts In Equilibrium With D1 And S1, And More Consumers Develop A Preference For Dr. Pepper, The New Equilibrium Price And Quantity AreA.13 And 55B.10 And 40C.10 And 65D.7 And 55E.10 And 5542.If The Market Starts In Equilibrium With D1 And S1, And Equilibrium Price And Quantity Increase To $10 And 65, Which Of The Following Could Have Caused The Change?A.An Increase In Consumer IncomeB.An Increase In Production CostsC.The Discovery That Dr. Pepper Causes Health ProblemsD.A Technological Advance In Dr. Pepper ProductionE.All Of The Above43.Which Of The Following Is Not One Of The "Other Things Equal" Underlying The Demand Curve?A.Prices Of ResourcesB.Purchasing Power Of BuyersC.Buyers' Tastes And PreferencesD.Numbers Of BuyersE.Buyers' Expectations44.A Change In The Quantity DemandedA.Results Whenever One Of The "Other Things Equal" Underlying The Demand Curve ChangesB.Results When The Price Of The Product Increases Or DecreasesC.Means A Shift In The Position Of The Demand CurveD.Means Movement Along A Given Demand CurveE.Is Both (B) And (D)

45.Suppose That All Workers Receive A Wage Reduction. What Would The Impact On The Market For Autos Be?A.The Supply Of Autos Would DecreaseB.The Demand For Autos Would IncreaseC.The Supply Of Autos Would Increase And The Demand For Autos Would FallD.Both A) And B)E.It Can Not Be Determined46.There Is An Increase In The Quantity Of Pizza Purchased But No Change In The Price Of Pizza. Which Of The Following Is Most Likely To Have Occurred?A.Supply Increased While Demand Remained UnchangedB.Both Supply And Demand IncreasedC.Supply Increased While The Quantity Demanded IncreasedD.Demand Increased While Supply Remained UnchangedE.Both Supply And Demand Decreased47.Two Goods Are Said To Be Substitutes In Consumption IfA.An Increase In The Price Of One Leads To A Fall In The Demand For The OtherB.An Increase In The Price Of One Leads To An Increase In The Demand For The OtherC.An Increase In The Price Of One Leads To An Increase In The Supply Of The OtherD.A Fall In The Price Of One Leads To An Increase In The Demand For The OtherE.A Decrease In The Price Of One Leads To A Decrease In The Supply Of The Other48.Assume Lettuce And Salad Dressing Are Complements In Consumption. An Increase In The Price Of Lettuce WillA.Lead To A Fall In The Demand For Salad DressingB.Lead To A Fall In The Quantity Demanded Of Salad DressingC.Have No Impact On The Demand For Salad DressingD.Lead To A Fall In The Supply Of Salad DressingE.Lead To A Rise In The Supply Of Salad Dressing

49.Which Of The Following Is For Inferior Goods?A.The Law Of Demand Does Not HoldB.They Are Of Low QualityC.The Demand For Them Falls As Consumer Income RisesD.All Of The AboveE.None Of The Above50.An Increase In The Wages Of Orange Pickers Will Have What Effect In The Market For Oranges?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined51.An Increase In Consumer Income Will Have What Effect On The Equilibrium Price And Quantity Of Hot Dogs?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined52.An Increase In The Price Of Cars Will Have What Effect On The Equilibrium Price And Quantity Of Gasoline?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined

53.A Technological Advance In The Production Of Computers Will Have What Effect On The Equilibrium Price And Quantity In The Computer Market?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined54.A Publicized Report That Finds Orange Juice Prevents Certain Diseases Will Have What Effect On The Equilibrium Price And Quantity Of Orange Juice?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined55.As The Baby Boom Generation Continues To Age, What Will Happen To The Equilibrium Price And Quantity Of Homes In Retirement Communities?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined56.If Consumers Expect An Increase In The Price Of Coffee Next Month, What Will Happen To The Equilibrium Price And Quantity Of Coffee This Month?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined

57.The Entry Of New Firms Into A Market, All Other Things Equal, Will Have What Effect On Equilibrium Price And Quantity?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined58.An Increase In The Price Of Flashlights Will Have What Effect On The Equilibrium Price And Quantity Of Batteries?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined59.If The Price Of Film Increases At The Same Time The Cost Of Camera Production Increases, What Will Happen To The Equilibrium Price And Quantity In The Camera Market?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined60.If There Is A Technological Advance In The Production Of Paper At The Same Time Consumer Income Increases (Assume Paper Is A Normal Good), What Will Happen In The Market For Paper?A.Price Will Increase, Quantity Will DecreaseB.Price Will Increase, Quantity Will IncreaseC.Price Will Decrease, Quantity Will DecreaseD.Price Will Decrease, Quantity Will IncreaseE.The New Equilibrium Price And Quantity Can Not Be Determined

61.Suppose The United Auto Workers Union Successfully Lobbies Congress To Enact An Import Quota On All Foreign Cars Imported Into The U.S. Which Of The Following Is Most Likely To Occur In The U.S.?A.A Fall In The Price Of Imported Cars And Increase In The Price Of DomesticsB.An Increase In The Demand For Domestic CarsC.A Decrease In American Autoworker WagesD.Higher Unemployment Among American AutoworkersE.A Fall In The Demand For Imports62.As Consumer Incomes Rise, The Demand Curve For Good X Shifts To The Right. Given This, Good X Must BeA.Produced By A Competitive FirmB.A High Quality ProductC.A Substitute GoodD.A Normal GoodE.An Inferior Good63.Since 1990, China's Growth Has BeenA.Roughly Equal To That Of The United StatesB.DecliningC.In The Double DigitsD.About 3% Per YearE.None Of The Above64.China's Growth Has Been A Result OfA.Increased Domestic DemandB.Rapidly Increasing InflationC.Investment In Other EconomiesD.Trade DeficitsE.Trade Surpluses

65.Since 1990, Foreign Investment In China HasA.Increased SlightlyB.Increased SignificantlyC.Been UnchangedD.Decreased SlightlyE.Decreased Significantly66.China Can Be Best Described As AA.Market EconomyB.Mixed EconomyC.Transitional EconomyD.Competitive EconomyE.Monopoly Economy67.From A Standpoint Of Resource Allocation, A Surplus Of Corn ImpliesA.Consumers Would Prefer Some Of The Resources Used To Produce Corn Be Used To Produce Something ElseB.The Market For Agricultural Products Is FailingC.Government Should Purchase The Surplus To Protect The FarmersD.The Price Of Corn Is Too Low And Should Be IncreasedE.The Quantity Demanded Of Corn Exceeds The Quantity Supplied68.After Establishing The Republic Of China In 1949, Mao's Communist Party Patterned The Chinese Economy AfterA.JapanB.TaiwanC.The UssrD.The United StatesE.Europe

69.Following The Establishment Of A Soviet Style Society In 1949, The State Planning Commission Was Created ByA.Chiang Kai-ShekB.Deng Xiaoping C.Mao Zedong D.Joseph StalinE.Wen Jiabao70.The State Planning Commission In China Has The Task OfA.Determining What Goods And Services Should Be ProducedB.Determining What Quantities Of Goods And Services Are ProducedC.Determining The Allocation Of Resources Used In The Production Of Goods And ServicesD.How The Goods And Services Are To Be DistributedE.Performing All Of The Tasks Listed Above71.The Economy Of The Peoples Republic Of China Operated As A Command EconomyA.From 1917 Until 1949B.From 1949 Until 1978 C.Since 1990D.From 1949 Until 1962E. Which Started China's Transition To A Market Economy72.Chinas Transition To A Market-Oriented EconomyA.Was Completed By Around 2004B.Was Abandoned In 2010 And The Country Has Returned To Command EconomyC.Has Resulted In Relatively Low Rates Of Economic GrowthD.Did Not Lead To Any Problems With Inflation Or UnemploymentE.Did Not Lead To Any Problems With Corruption73.In A Market Economy, A Shortage Of Wheat Will Cause TheA.Price Of Bread To RiseB.Price Of Bread To FallC.Price Of Wheat To FallD.Supply Of Bread To IncreaseE.Supply Of Wheat To Fall

74.Which Of The Following Was Not A Problem For China's Centralized Economy?A.Informational RequirementsB.Incentives For EfficiencyC.The Emphasis On Heavy Machinery ProductionD.Low Quality ProductsE.None Of The Above (They Were All Problems)75.If The Demand Curve For Bran Muffins Has Shifted Out Due To A Medical Study That Indicates That Regular Consumption Of Bran Lowers Cholesterol, Then We Can Conclude That There Has BeenA.A Response To The Increase Demand For A Complementary GoodB.A Change In Consumer TastesC.A Reduction In The Production Costs Of BranD.An Increase In Consumer ExpectationsE.An Improvement In The Economy, Resulting In Higher Incomes76.Consumer Purchases Of Hybrid Cars Have Risen Sharply In Recent Years. One Important Factor In This Increased Demand For These Vehicles IsA.It's Cool To Be "Green" And Drive A HybridB.Decreasing Prices Of A Complementary GoodC.Change In Expectations Based Upon The Belief That Energy Prices Will Rise In The FutureD.Reduced Availability Of A SubstituteE.Government Fuel MandatesTrue / False Questions77. Mao Zedong Started China's Transition To A Market Economy 78.Private Ownership Of An Economy's Resources Is A Defining Feature Of The Pure Market Economy 79.The Institution Of Private Property Rights Is An Essential Feature Of The Market Economy 80.The U.S. Is Best Described As A Pure Market Economy 81.In The Pure Command Economy, Most Resource Use Decisions Are Made By Government 82.In A Market Economy, Price Fluctuations Indicate There Is A Lack Of Effective Competition 83.For A Market To Be Considered Purely Competitive, New Rivals Must Be Free To Enter If They Feel They Can Effectively Compete 84.Blocked Entry Is Essential For A Purely Competitive Market 85.Entry Is Blocked In Monopoly Markets 86.In Response To An Increase In The Price Of Beer, Bob Reduces His Consumption From 3 To 2 Beers Per Day. This Reflects A Reduction In Bob's Demand For Beer

87.Surpluses Tend To Drive Competitive Prices Downward Toward Equilibrium, And Shortages Tend To Drive Competitive Prices Upward Toward Equilibrium 88.When The Entire Demand Curve Shifts Out To The Right, We Say There Has Been An Increase In Demand 89.A Change In Supply Occurs When One Of The Other Things Equal Changes And Is Represented As Movement Along The Supply Curve 90.A Change In The Price Of Automobiles Will Cause A Change In The Demand For Automobiles 91.Demand Is The Quantity Of A Product Per Time Period That Buyers Will Buy At The Prevailing Price, Other Things Equal 92.The Law Of Demand States That Consumers Will Buy Less At Lower Prices, But Only If A Number Of Other Things Are Held Constant 93.The Law Of Supply States That Sellers Will Sell More At High Prices Than At Low Prices

94.When An Economist Says That The Demand For A Product Has Increased, This Means That Consumers Are Now Willing To Purchase More Of The Product At Each Alternative Price 95.An Increase In The Price Of A Good Will Decrease Demand For The Good 96.An Increase In The Supply Of A Good Will Increase Demand For The Good 97.An Increase In Consumer Income Can Either Increase Or Decrease Demand For A Good 98.During December Each Year, The Number Of Christmas Trees Sold Increases, As Does The Price Of The Trees. This Clearly Violates The Law Of Demand 99.An Increase In The Demand For Gasoline Accompanied By A Decrease In The Supply Of Gasoline Will Cause The Price To Rise, But May Cause The Quantity Purchased To Increase, Decrease, Or Remain The Same 100.Fluctuating Prices Tend To Confuse Consumers, So Prices Should Be Government Controlled Whenever Possible 101.An Increase In The Price Of Gas Will Cause An Increase In The Supply Of Gas Since It Will Be More Profitable To Sell

102.The Demand Curve For An Inferior Good Is Upward Sloping, Like A Typical Supply Curve 103.When There Is An Increase In Both Supply And Demand, It Is Impossible To Determine What Happens To The Equilibrium Price Unless The Magnitudes Of The Supply And Demand Changes Are Known 104.During The 1992 Presidential Campaign, Ross Perot Recommended A 50-Cents-Per-Gallon Increase In The Tax On Gasoline. Such An Increase Would Have Little Or No Effect On The Quantity Of Gas Sold Since We Have Few Options To Driving 105.If You Buy More Of A Good As A Result Of An Increase In Income, The Good Is Known As A Consumer Good 106.Appliances And Electricity Are An Example Of Complementary Goods 107.An Increase In The Supply Of A Good Will Increase The Price Of The Good, Other Things Being Equal 108.When Both Supply And Demand Increase, Price And Quantity Will Increase 109.Shortages Of A Particular Good Can Be Expected To Lead To Rising Prices And Increased Production For That Good In A Market Economy

110.Shortages Of A Particular Good Can Be Expected To Lead To Decreasing Prices And Lower Production For That Good In A Market Economy 111.In The Short Run, An Increase In Demand For A Good Will Result In Higher Prices In A Market Economy 112.In The Short Run, An Increase In Demand For A Good Will Result In Long Lines In A Command Economy 113.In The Long Run, An Increase In The Demand For A Good Will Result In An Increase In Supply Of The Good In A Market Economy 114.In The Long Run, An Increase In The Demand For A Good Will Result In An Increase In Supply Of The Good In A Command Economy 115.If The Demand For A Good Increases In A Monopoly Market, Price Will Rise And Firms Will Enter The Industry In The Long Run 116.China's Transition To A Market Economy Began In 1990.

117.Command Economies Introduce Incentives For Efficient Production

118.Under The Great Leap Forward, The Task Of Determining How Much To Produce Fell On The State Planning Commission 119.The Chinese Communist Party Favored Production In The Heavy Industry Sectors Of The Economy 120.In 1978, Deng Xiaoping Started The Process Of Transitioning China To A "Socialist Market Economy." 121.While The Superiority Of The Market Orientation Seems Clear, It Is Equally Clear That The Transition From A Command To A Market Economy Is Very Difficult 122.China's Transition To A Market Orientation Has Been Relatively Problem-Free 123.China's Transition To A Market Orientation Began With Agricultural Reform 124.China's Transitional Economy Is Free Of Unemployment And Inflation 125.15 Of The 20 Cities With The Highest Levels Of Air Pollution Are In China.

Chapter 03

Government Control Of Prices In Mixed Systems: Who Are The Winners And Losers?

Multiple Choice Questions1.In A Market Economy, If The Market Supply Of A Product Decreases Relative To Its Demand, The Product's Price WillA.FallB.RiseC.Be UnchangedD.Fall And Then RiseE.Rise And Then Fall2.In A Mixed Economy, Governments May Intervene In Markets In Which Of The Following Ways?A.Price CeilingsB.Minimum WagesC.Agricultural Price SupportsD.Both A) And B)E.All Of The Above3.Which Of The Following Is Of How Markets React To Government Intervention? They ReactA.To Provide The Intended ResultsB.In Ways That Offset Intended ImpactsC.Quickly To Reverse Intended EffectsD.In Completely Unpredictable WaysE.So Slowly That Policies Never Work As They Are Intended4.The Consequences Of Government InterventionA.Are Generally As Planned By Policy MakersB.Often Involve Unintended ConsequencesC.Fall On Low Income IndividualsD.Are Not Felt Until The Next Fiscal YearE.Serve To Increase Efficiency In Markets

5.A Maximum Allowable Price For A Good Or Service Is AA.Price CeilingB.Price FloorC.Minimum WageD.Market EquilibriumE.Price Support6.To Be Effective, A Price Ceiling Must Be SetA.By The MarketB.Above EquilibriumC.Below EquilibriumD.At EquilibriumE.By Producers7.The Purpose Of A Price Ceiling May Be To Hold DownA.InflationB.UnemploymentC.Interest RatesD.WagesE.All Of The Above8.Price Ceilings May Be Used On A Selective Basis ToA.Control Inflation In The EconomyB.Make A Good Cheaper To ProduceC.Boost The Income Of FirmsD.Make A Good Accessible To All Income LevelsE.Increase Workers' Incomes9.During The 1970's About How Many Cities In The U.S. Had Rent Controls?A.1,000B.200C.50D.15E.5

10.One Of The Earliest Known Rent Control Laws Was Instituted In Which City And When?A.New York At The Start Of WwiiB.Washington D.C. During The Civil WarC.Paris In The 1700sD.Rome In The 1400sE.Chicago During The Great Depression11.A Minimum Allowable Price For A Good Or Service Is Known AsA.A Price FloorB.A Minimum WageC.A Price SupportD.All Of The AboveE.None Of The Above12.Price Floors Are Often Instituted For Which Of The Following Purposes?A.To Prevent InflationB.To Make Goods And Services Accessible To All Income LevelsC.To Increase The Income Of SellersD.To Increase The Wages Of WorkersE.To Do All Of The Above13.Which Of The Following Is Of The First U.S. Minimum Wage?A.It Was Set Under The Fair Labor Standards ActB.It Was Instituted In 1938C.It Set The Minimum Wage At 25 Cents Per HourD.It Applied Only To Certain Designated IndustriesE.All Of The Above14.In 1981, The U.S. Federal Minimum Wage Was Increased ToA.$2.00 Per HourB.$2.50 Per HourC.$3.35 Per HourD.$4.00 Per HourE.$5.15 Per Hour

15.Which Of The Following Is Of The U.S. Minimum Wage Over The 1980s And 1990s?A.It Was UnchangedB.It Increased Significantly Through The 1980s And Was Constant Through The 1990sC.It Was Constant Through The 1980s And Then Increased Significantly Through The 1990sD.It Fell During The 1990sE.It Was Eliminated In The 1990s16.As Of Summer 2009, The U.S. Federal Minimum Wage Is Set At What Rate Per Hour?A.$5.15B.$5.85C.$6.55D.$7.25E.$8.0017.Some States Also Have Their Own Minimum Wage Legislation. Generally These Laws Set The State Minimum WageA.Above The Federal Minimum WageB. Below The Federal Minimum WageC.Equal To The Federal Minimum WageD.To Either A) Or C)E.To Any Of The Above18.As The Price Of Rental Housing Falls, Which Of The Following Occurs?A.The Quantity Demanded Of Housing IncreasesB.People Take In Roommates To Share CostsC.Individuals Move Back In With Their FamiliesD.More Rental Housing Is ConstructedE.All Of The Above19.As The Price Of Rental Housing Increases, Which Of The Following Will Happen?A.Property Will Be Switched From Commercial Property To Rental HousingB.More Rental Housing Will Be BuiltC.Renters Will Be Induced To Buy HousingD.The Average Number Of Renters Per Rental Unit Will IncreaseE.All Of The Above

Questions 20 - 24 Refer To The Graph Below.20.If The Demand For Rental Housing Is Dd And The Supply Of Rental Housing Is Ss, The Equilibrium Rent And Quantity (Number Of Units In Thousands) AreA.$800 And 25B.$625 And 30C.$600 And 20D.$400 And 25E.$600 And 2521.If Demand And Supply Are Dd And Ss And Demand Increases To D1d1, The New Equilibrium Rent And Quantity (Number Of Units In Thousands) AreA.$800 And 25B.$625 And 30C.$600 And 20D.$400 And 25E.$600 And 25

22.An Increase In Rent That Leads To Increased Profitability Of Producing Rental Housing Will Lead To Which Of The Following Shifts In The Long Run?A.Dd To D1d1B.D1d1 To DdC.S1s1 To SsD.Ss To S1s1E.None Of The Above23.If The Supply And Demand For Rental Housing Are Dd And Ss, What Effect Will A Rent Control Law That Sets The Maximum Allowable Rent At $400 Have On The Market? It Will Lead ToA.A Surplus Of 5 Thousand UnitsB.A Shortage Of 5 Thousand UnitsC.A Surplus Of 10 Thousand UnitsD.A Shortage Of 10 Thousand UnitsE.No Change In Equilibrium Rent Or Quantity24.If The Supply And Demand For Rental Housing Are Dd And Ss, What Effect Will A Rent Control Law That Sets The Maximum Allowable Rent At $800 Have On The Market? It Will Lead ToA.A Surplus Of 5 Thousand UnitsB.A Shortage Of 5 Thousand UnitsC.A Surplus Of 10 Thousand UnitsD.A Shortage Of 10 Thousand UnitsE.No Change In Equilibrium Rent Or Quantity25.If People Are Forced To Commute As A Result Of A Rent Control Law In A City, Which Of The Following Results? An Increase InA.Rent Paid By CommutersB.Direct Commuting CostsC.Opportunity Costs For CommutersD.Pollution And Traffic Congestion In CitiesE.All Of The Above

26.Rent Control Laws Will _____________ The Search Costs Of Potential Renters.A.IncreaseB.DecreaseC.EliminateD.MitigateE.ReimburseQuestions 27 - 32 Refer To The Graph Below.27.The Equilibrium Rent And Quantity (1,000s Of Units) AreA.$900 And 30B.$750 And 40C.$600 And 30D.$900 And 50E.$600 And 50

28.If Rent Is Controlled At $900, The Quantity Of Rental Housing Demanded Will BeA.0B.30C.40D.50E.More Than 5029.If Rent Is Controlled At $600, The Quantity Of Rental Housing Demanded Will BeA.0B.30C.40D.50E.More Than 5030.If Rent Is Controlled At $900, The Quantity Of Rental Housing Supplied Will BeA.0B.30C.40D.50E.More Than 5031.If Rent Is Controlled At $600, The Quantity Of Rental Housing Supplied Will BeA.0B.30C.40D.50E.More Than 5032.If Rent Is Controlled At $600, There Will Be A ______ Equal To ____ Thousand Units In The Market.A.Surplus; 10B.Surplus; 20C.Shortage; 10D.Shortage; 20E.Excess Supply; 10

33.Rent Control Laws May Lead To Which Of The Following Unintended Effects?A.Under-The-Table PaymentsB.Increased Forced CommutingC.Higher Search CostsD.Lost Profit Incentives To Change The Supply Of Rental HousingE.All Of The Above34.Owners Of Rent Controlled Property May Attempt To Increase Profits ByA.Raising RentsB.Improving The Quality Of Their Rental UnitsC.Taking Under-The-Table PaymentsD.Converting Commercial Properties To Rental PropertiesE.All Of The Above35.In The Short-Run, Who "Wins" From Rent Control Laws?A.All People Who Want To Rent HousingB.Owners Of Rent Controlled PropertyC.People Who Buy HousingD.Governments That Pay To Enforce Rent Control LawsE.None Of The Above36.In The Short-Run, Who "Loses" From Rent Control Laws?A.Those Who Cannot Find Rental HousingB.People Who Are Forced To CommuteC.Individuals Who Experience Increased Search Costs For Rental HousingD.Those Who Must Make Under-The-Table Payments To Secure Rental HousingE.All Of The Above37.The Demand For Labor Is A Derived Demand Because It Is Dependent OnA.The Demand For The Product Being ProducedB.The Marginal Revenue Of The Product Being ProducedC.The Marginal Productivity Of The Workers Producing The ProductD.All Of The AboveE.None Of The Above

38.The Additional Revenue That Accrues To A Firm When An Additional Worker Is Hired IsA.The Marginal Revenue Product Of LaborB.The Marginal Product Of LaborC.The Marginal Revenue Of LaborD.The Marginal Utility Of LaborE.None Of The Above39.The Marginal Product Of Labor Is The AdditionalA.Revenue Received When A Worker's Output Is SoldB.Production Cost Of Hiring An Additional LaborC.Output Produced As A Result Of Giving Workers Additional CapitalD.Output Produced As A Result Of Hiring An Additional WorkerE.Product Developed As A Result Of Ideas Generated By Workers40.The Additional Revenue A Firm Receives As A Result Of Selling An Additional Unit Of Output Is CalledA.PriceB.ProfitC.Total RevenueD.Marginal RevenueE.Marginal Revenue Product41.A Firm Increases The Number Of Workers It Hires From 50 To 52 And, As A Result, Output Increases From 100 To 110. Each Of The Additional Units Of Output Can Be Sold For $2. What Is The Marginal Product Of The 52nd Worker?A.2B.5C.10D.20E.50

42.A Firm Increases The Number Of Workers It Hires From 50 To 52 And, As A Result, Output Increases From 100 To 110. Each Of The Additional Units Of Output Can Be Sold For $2. What Is Marginal Revenue For The Last 10 Units Produced?A.2B.5C.10D.20E.5043.A Firm Increases The Number Of Workers It Hires From 50 To 52, And As A Result, Output Increases From 100 To 110. Each Of The Additional Units Of Output Can Be Sold For $2. What Is The Marginal Revenue Product Of The 52nd Worker?A.2B.5C.10D.20E.5044.The Law Of Diminishing Returns States That, As Additional Units Of A Variable Input Are Added To A Given Amount Of A Fixed Input, Increases In Output WillA.IncreaseB.DeclineC.Stay The SameD.AccelerateE.Become Erratic45.A Firm Has A Given Amount Of Capital. When It Hires 10 Workers, Output Is 30. When It Hires 11 Workers, Output Is 40. If The Law Of Diminishing Returns Applies, Which Of The Following Is The Most Likely Amount Of Output When The Firm Hires 12 Workers?A.70B.60C.50D.45E.-10

46.Which Of The Following Represents The Demand Curve For Labor For A Firm?A.The Mr CurveB.The Mp CurveC.The Mrp CurveD.The Mc CurveE.None Of The AboveQuestions 47 - 51 Refer To The Table Below.47.The Marginal Product Of The 4th Worker IsA.20B.40C.100D.140E.16048.If Each Unit Of Output Is Sold For $5, The Marginal Revenue Of The Second Unit Of Output Sold IsA.$5B.$10C.$40D.$50E.$200

49.The Marginal Product Of The First Worker IsA.0B.10C.40D.50E.Unable To Be Determined50.If Each Unit Of Output Is Sold For $5, The Marginal Revenue Product Of The 3rd Worker IsA.5B.50C.200D.250E.30051.If Each Unit Of Output Is Sold For $2, The Marginal Revenue Product Of The 6th Worker IsA.2B.4C.10D.20E.17052.As The Wage Increases, A Worker Will Choose To WorkA.MoreB.LessC.The Same AmountD.OvertimeE.An Amount That Cannot Be Determined53.A Change In The Hours Of Work That Occurs In Response To A Wage Change, Other Things Equal, Is Known As TheA.Supply Of LaborB.Substitution EffectC.Income EffectD.Wage EffectE.Opportunity Cost Of Labor

54.An Increase In The Wage From $6 Per Hour To $6.50 Per Hour Causes A Worker To Increase Her Hours Worked From 40 To 45 Hours Per Week. For This Worker, Which Effect Dominates?A.SubstitutionB.IncomeC.WageD.WealthE.Leisure55.Which Of The Following Measures The Change In The Hours Of Work That Occurs When There Is A Change In Income, Other Things Equal?A.The Supply Of Labor CurveB.The Substitution EffectC.The Income EffectD.Marginal ProductivityE.The Wage Effect56.If An Increase In The Wage Rate From $6.00 Per Hour To $6.50 Per Hour Causes A Worker To Decrease His Hours Worked From 40 To 35 Hours Per Week, Which Effect Dominates?A.SubstitutionB.IncomeC.WageD.WealthE.Leisure57.Which Effect Dominates If A Workers Supply Curve For Labor Is Negatively Sloped?A.SubstitutionB.IncomeC.WageD.WealthE.Leisure

Questions 58 - 63 Refer To The Graph Below.58.Equilibrium Wage And Quantity In The Labor Market AreA.$3 And 8B.$5 And 22C.$7 And 16D.$10 And 8E.$10 And 2259.At A Wage Of $10, The Mrp Of Labor IsA.$8B.$10C.$80D.$216E.Impossible To Determine Using This Graph60.If The Wage Rate Is $10, What Is The Quantity Of Labor Demanded?A.0B.8C.16D.22E.25

61.If The Wage Rate Is $10, What Is The Quantity Of Labor Supplied?A.0B.8C.16D.22E.2562.If The Wage Rate Is $3, Which Of The Following Will Occur?A.A Shortage Of 8B.A Surplus Of 8C.A Shortage Of 17D.A Surplus Of 17E.A Surplus Of 1663.To Be Effective, A Minimum Wage In This Market Would Have To Be SetA.Above $7B.Above $10C.Below $5D.Below $7E.Below $10

Questions 64 - 68 Refer To The Graph Below.

64.A Minimum Wage Set At $12 Per Hour Would Result In A Surplus OfA.0B.10C.20D.35E.None Of The Above65.A Minimum Wage Of $12 Would Lead To A Quantity Of Labor Demanded Equal ToA.0B.15C.25D.35E.More Than 3566.A Minimum Wage Of $12 Would Lead To A Quantity Of Labor Supplied Equal ToA.0B.15C.25D.35E.More Than 3567.A Minimum Wage Set At $4 Would Result In A Shortage OfA.0B.10C.20D.35E.None Of The Above68.If A Minimum Wage Is Set At $4, The Quantity Of Labor Demanded In The Market Will BeA.0B.15C.25D.35E.More Than 35

69.Which Of The Following Groups Most Suffers The Costs Of Minimum Wage Laws?A.College GraduatesB.Senior CitizensC.TeenagersD.Manufacturing WorkersE.Agricultural Workers70.Which Of The Following Is Of The Minimum Wage?A.It Has Significantly Reduced Poverty In The United StatesB.A Worker Earning The Minimum Wage Will Keep A Family Of Three Out Of PovertyC.It Results In A Much More Equal Distribution Of Income In The United StatesD.Unemployment Rates Are Unaffected By The Minimum WageE.None Of The Above Is 71.Research Suggests That As The Minimum Wage Is Increased By 10%, The Associated Increase In The Teenage Unemployment Rate Is NearlyA.1 PercentB.10 PercentC.20 PercentD.25 PercentE.30 Percent72.The Alternative Analysis Of The Minimum Wage Indicates That Which Of The Following May Be ?A.The Demand Curve Is Vertical Over The Relevant RangeB.The Supply Curve Is Vertical Over The Relevant RangeC.There Is Only A Very Slight Unemployment Effect Of A Minimum WageD.All Of The AboveE.None Of The Above

73.According To The Alternative Analysis Of The Minimum Wage, Which Of The Following Might Lead The Demand Curve For Labor To Be Vertical Over The Relevant Range?A.Firms Offset Higher Wages By Allowing Longer Lines During Peak HoursB.Higher Wages Are Offset By Increased EfficiencyC.Prices Are Increased For Goods That Are Not Price-SensitiveD.All Of The AboveE.None Of The Above74.Which Of The Following Individuals Lose As A Result Of An Effective Minimum Wage Law?A.Those Who Remain Employed After The Minimum Wage Is InstitutedB.Teenagers Who Lose Their Jobs And Valuable On-The-Job TrainingC.Skilled Workers Who Earn Wages Above The Minimum WageD.All Of The AboveE.None Of The Above75.If There Is A Price Ceiling Set For Milk At $2.50 Per Gallon And The Current Equilibrium Price Is $2.25 Per Gallon, Then We Can ConcludeA.That The Price Ceiling Is Doing Its Job, Keeping Prices LowB.That The Price Ceiling Is Non-Binding And Has No Effect On The Market EquilibriumC.That Milk Imports Are Reducing The PriceD.That Grocery Stores Are Afraid To Raise The Price To The Ceiling Level, For Fear Of Prosecution By The GovernmentE.That Price Ceilings Set A Minimum Price76.Given That A Firm Is Selling Its Product In A Competitive Market, Meaning That Its Marginal Revenue Is Constant, What Would The Law Of Diminishing Returns To Labor Inputs Imply About The Demand For Labor?A.That The Demand For Labor Would Be Constant If The Market Is StableB.That The Firm Would Pay Increasing Wages To Attract Qualified EmployeesC.The Demand Would Diminish With The Output Of New WorkersD.The Demand Curve For Labor Has A Negative Slope Resulting From Declining Marginal ProductE.The Law Of Diminishing Returns Has No Effect On Labor Demand

77.The Fact That We Observe Positively Sloped Market Labor Supply Curves Implies ThatA.The Substitution Effect Is Stronger That The Income Effect For Most WorkersB.The Income Effect Is Stronger Than The Substitution Effect For Most WorkersC.Most Workers Don't Have Income Or Substitution EffectsD.The Income Effect Plus Substitution Effect Results In The Positive SlopeE.Labor Laws Require Workers To Work At Least 40 Hours Per Week

True / False Questions78.In A Mixed Economy, Markets Adjust Freely And All Markets Are Cleared. 79.In A Mixed Economy, Governments Intervene In Markets To Affect The Prices Of Individual Goods. 80.In A Mixed Economy, Governments Intervene In Markets To Control Inflation. 81.Approximately 20 U.S. Cities Have Rent Control Laws. 82.There Are Examples Of Rent Controls From As Early As The 1700s. 83.Many Rent Controls Were Established As A Result Of World War Ii And Were Kept Even After The War Ended.

84.Some Universities Have Rent Controlled Student Housing. 85.Price Floors Are Instituted To Increase The Income Of Sellers. 86.The 1938 Fair Labor Standards Act Created The First U.S. Rent Control Law. 87.The First U.S. Minimum Wage Was Set At 25 Cents An Hour. 88.The U.S. Minimum Wage Did Not Change Throughout The 1980s And 1990s. 89.All U.S. Workers Are Covered Under The U.S. Minimum Wage Law. 90.Some States Enact Their Own Minimum Wage Laws. 91.The Quantity Of Housing Demanded Does Not Change When Prices Increase Because People Have To Live Somewhere. 92.In The Short-Run, The Supply Of Housing Can Increase Quickly.

93.A Price Ceiling Must Be Set Above Equilibrium To Have Any Effect On The Market For Housing. 94.Rent Controls Result In Illegal Payments To Acquire Housing. 95.Rent Controls Decrease Renters' Housing Search Costs. 96.Rent Controls Lead To Increased Commuting. 97.6 Of The 10 Cities With The Highest Homelessness Have Rent Control Laws. 98.Rent Controls Create Profit Incentives To Increase The Supply Of Rental Housing. 99.Minimum Housing Standards Prevent Any Property Deterioration In Rent Controlled Housing. 100.Rent Controls Result In A Misallocation Of Resources.

101.The Majority Of Individuals Support The Minimum Wage. 102.The Minimum Wage Allows An Individual To Earn Enough To Keep A Family Of Three Above The Poverty Line. 103.Rent Controls Lead To Housing Shortages. 104.Rent Controls Lead To Conversion Of Rental Housing To Commercial Uses. 105.Rent Controls Make Housing More Accessible To Homeless Individuals. 106.The Demand For A Product Is A Derived Demand. 107.If 10 Workers Produce 100 Units Of Output And 11 Workers Produce 108 Units Of Output, The Marginal Product Of The 11th Worker Is 8. 108.If All Units Of A Firm's Output Sell For $10 Each, Marginal Revenue Is Constant.

109.The Additional Revenue A Firm Receives As A Result Of Hiring An Additional Worker Is Mrp. 110.Limited Amounts Of Capital Eventually Lead To Diminishing Returns To Labor. 111.A Firm's Marginal Revenue Curve Is Also Its Demand Curve. 112.As The Wage Increases, The Quantity Of Labor An Individual Supplies Will Increase. 113.As The Wage Increases, The Quantity Of Labor An Individual Supplies May Decrease. 114.If A Worker Works More As The Wage Increases, The Substitution Effect Is Dominating. 115.If A Worker Works More As The Wage Increases, The Income Effect Is Dominating. 116.If The Supply Of Labor Curve Is Positively Sloped, The Substitution Effect Is Dominating. 117.If The Supply Curve Of Labor Is Positively Sloped, The Income Effect Is Dominating.

118.Evidence Indicates The Supply Curve Of Labor Is Positively Sloped. 119.A Surplus Of Labor Is Unemployment. 120.Teenagers Are The Group Most Likely To Work For Minimum Wage. 121.Working For The Minimum Wage Provides Valuable On-The-Job-Training. 122.The Minimum Wage In 2008 Was Approximately 37% Of Average Earnings. 123.The Minimum Wage Is 100% Of The Poverty Level. 124.A 10% Increase In The Minimum Wage Is Estimated To Increase Teenage Unemployment By 15%. 125.Firms Can Offset Increased Wage Costs Due To An Increase In The Minimum Wage By Increasing Efficiency. 126.Evidence Indicates The Minimum Wage Has Little Effect On The Income Distribution. 127.The Supply Of Labor Is Very Responsive To Changes In The Wage.