Question 1

Auction markets usually

Accepted Answer

A)   cause a shortage because there is more than one bidder for an item
B)   cause a surplus because auctions seldom sell off all the items at the auction
C)   fail to clear the market
D)   arrive at an equilibrium price within minutes for each item auctioned
E)   are unfair and for this reason have been regulated by governmentF) B) and C)
G) A) and E)

Question 2

The effect of improvements in food-producing technology can be shown graphically by

Accepted Answer

A)   rightward shifts in the supply curve of food
B)   leftward shifts in the supply curve of food
C)   rightward shifts in the demand curve for food
D)   leftward shifts in the demand curve for food
E)   both leftward shifts in the demand curve for and the supply curve of foodF) All of the above
G) None of the above

Question 3

To ration a good means that

Accepted Answer

A)   some distribution mechanism replaces price to determine who gets what quantity of goods
B)   the government owns all the resources used to produce the good
C)   the government purchases the goods not sold on the market
D)   a price floor has been imposed
E)   the supply of the good is greater than the demandF) A) and E)
G) B) and C)

Question 4

The farm problem in the United States can be summed up as

Accepted Answer

A)   low productivity, high prices, and an income-elastic demand for food
B)   high productivity, high prices, and an income-elastic demand for food
C)   low productivity, high prices, and an income-inelastic demand for food
D)   high productivity, low prices, and an income-inelastic demand for food
E)   high productivity, low prices, and an income-elastic demand for foodF) A) and C)
G) B) and C)

Question 5

Suppose that a price ceiling is imposed because the market equilibrium is perceived to be too high. Which of the following rationing schemes makes no sense?

Accepted Answer

A)   rationing fish to those willing to pay the highest price
B)   rationing fish by means of a lottery
C)   rationing fish to the elderly first
D)   rationing fish on a first-come, first-served basis
E)   rationing fish according to family sizeF) B) and C)
G) D) and E)

Question 6

There is a trade-off between having prices that the government believes are too low and having a chronic excess supply.

Accepted Answer

A) True 
 B)False

Question 7

In what decade did the U.S. government first decide to intervene in the farm economy?

Accepted Answer

A)   1950s
B)   1930s
C)   1970s
D)   1960s
E)   1980sF) C) and D)
G) A) and B)

Question 8

According to the article cited in the text, recently proposed European farm policy reform was met by

Accepted Answer

A)   support by small farmers
B)   support by large farmers
C)   protests by consumers
D)   resistance by taxpayers
E)   demonstrations by French farmersF) B) and E)
G) None of the above

Question 9

The excess demand created when the government imposes a price ceiling

Accepted Answer

A)   shifts the equilibrium price upward to the price ceiling level
B)   is the difference between the quantity demanded at the old equilibrium price and quantity supplied at the price set by the price ceiling
C)   is the difference between the quantity demanded at the price set by the price ceiling and quantity supplied at the old equilibrium price
D)   is the difference between the quantity demanded at the price set by the price ceiling and quantity supplied at the price set by the price ceiling
E)   is the difference between the old equilibrium price and the price set by the priceceilingF) B) and E)
G) C) and E)

Question 10

The pre-1973 farm price support program resulted in a(n)

Accepted Answer

A)   substantial increase in the number of farmers
B)   substantial increase in the number of farms
C)   excess demand for farm goods
D)   excess supply of farm goods
E)   major benefit to consumers of farm goodsF) B) and E)
G) A) and D)

Question 11

Ration coupons are typically associated with which of the following government programs?

Accepted Answer

A)   price floors
B)   target prices
C)   soil bank programs
D)   price ceilings
E)   minimum wage lawsF) A) and C)
G) A) and E)

Question 12

Suppose that the government places a price ceiling in the fish market, and that the ration coupons it issues are bought and sold on a ration coupon market before they are used to purchase fish. Then the

Accepted Answer

A)   excess supply of fish will be eliminated
B)   price of fish set by the price ceiling would fall
C)   price of fish set by the price ceiling would rise
D)   price ceiling must have been too low
E)   purpose of that price ceiling would be defeatedF) A) and B)
G) A) and C)

Question 13

A ration coupon is generally used

Accepted Answer

A)   to allocate the excess supply of a good
B)   if a price floor is imposed on a market
C)   to limit the supply of a good
D)   if there is an excess supply
E)   to allocate the good under conditions of excess demandF) A) and D)
G) A) and C)

Question 14

In a market where supply and demand curves are both highly inelastic, a price ceiling will have a(n)

Accepted Answer

A)   large effect on quantity supplied and little effect on quantity demanded
B)   large effect on quantity demanded and little effect on quantity supplied
C)   large effect on both quantity demanded and quantity supplied
D)   little effect on both quantity demanded and quantity supplied
E)   effect only on priceF) B) and E)
G) C) and E)

Question 15

Price floors are used as a method to

Accepted Answer

A)   assure consumers that prices won't fall in the future
B)   protect producers from paying high prices for the resources they use to produce goods
C)   guarantee that there will be enough food for consumers
D)   combat excess demand in the market
E)   ensure sellers a minimum price for their goodsF) None of the above
G) A) and D)

Question 16

One method of dealing with the unfairness of substantial price increases caused by a national crisis is for government to

Accepted Answer

A)   impose price ceilings and allocate goods by issuing ration coupons
B)   print ration coupons and allow buyers to bid for them
C)   shift the supply curve to the left
D)   impose price floors to protect consumers
E)   shift the demand curve to the rightF) C) and E)
G) All of the above

Question 17

A price floor is a

Accepted Answer

A)   fixed point on the supply curve that represents the lowest price a producer will accept
B)   fixed point on the demand curve that represents the lowest price a consumer will pay
C)   minimum price set by the government that is positioned above the equilibrium price
D)   maximum price set by the government that is positioned above the equilibrium price
E)   maximum price set by the government that is positioned below the equilibrium priceF) B) and E)
G) A) and B)

Question 18

The invention of parity price ratios was designed to protect farmers' purchasing power.Over the years, these parity price ratios have

Accepted Answer

A)   been fixed at 100 percent
B)   increased to approximately 125 percent of their initial value set in 1910-1914
C)   been increasing at approximately 25 percent per year
D)   been falling and are less than 50 percent of the 1910-1914 ratio
E)   been volatile, increasing and decreasing sometimes dramatically, but still averaging approximately 100 percent of 1910-1914 levels, which was the long-run targetF) A) and B)
G) A) and C)

Question 19

-In Exhibit F -1 a $25 ceiling price on campus rock concert tickets results in the loss of $18,000 for the student organization sponsoring the rock concert.

Accepted Answer

A) True 
 B)False

Question 20

When increases in the demand for food-shown as rightward shifts in the demand curve-are relatively small when compared to the increases in food supply-shown as right wardshifts in the supply curve-equilibrium price

Accepted Answer

A)   rises and equilibrium quantity falls
B)   falls and equilibrium quantity falls
C)   rises and equilibrium quantity rises
D)   falls and equilibrium quantity rises
E)   and equilibrium quantity stay the sameF) B) and C)
G) B) and E)

Exam 6: Price Ceilings and Price Floors

According to the article cited in the text, recently proposed European farm policy reform was met by

Correct AnswerverifiedShow Answer

Suppose that the government places a price ceiling in the fish market, and that the ration coupons it issues are bought and sold on a ration coupon market before they are used to purchase fish. Then the

Correct AnswerverifiedShow Answer

The pre-1973 farm price support program resulted in a(n)

Correct AnswerverifiedShow Answer

In what decade did the U.S. government first decide to intervene in the farm economy?

Correct AnswerverifiedShow Answer

The invention of parity price ratios was designed to protect farmers' purchasing power.Over the years, these parity price ratios have

Correct AnswerverifiedShow Answer

The farm problem in the United States can be summed up as

Correct AnswerverifiedShow Answer

Ration coupons are typically associated with which of the following government programs?

Correct AnswerverifiedShow Answer

Price floors are used as a method to

Correct AnswerverifiedShow Answer

Auction markets usually

Correct AnswerverifiedShow Answer

The effect of improvements in food-producing technology can be shown graphically by

Correct AnswerverifiedShow Answer

To ration a good means that

Correct AnswerverifiedShow Answer

-In Exhibit F -1 a $25 ceiling price on campus rock concert tickets results in the loss of $18,000 for the student organization sponsoring the rock concert.

Correct AnswerverifiedShow Answer

The excess demand created when the government imposes a price ceiling

Correct AnswerverifiedShow Answer

Suppose that a price ceiling is imposed because the market equilibrium is perceived to be too high. Which of the following rationing schemes makes no sense?

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A price floor is a

Correct AnswerverifiedShow Answer

When increases in the demand for food-shown as rightward shifts in the demand curve-are relatively small when compared to the increases in food supply-shown as right wardshifts in the supply curve-equilibrium price

Correct AnswerverifiedShow Answer

There is a trade-off between having prices that the government believes are too low and having a chronic excess supply.

Correct AnswerverifiedShow Answer

In a market where supply and demand curves are both highly inelastic, a price ceiling will have a(n)

Correct AnswerverifiedShow Answer

A ration coupon is generally used

Correct AnswerverifiedShow Answer

One method of dealing with the unfairness of substantial price increases caused by a national crisis is for government to

Correct AnswerverifiedShow Answer

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