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This table shows the quantity of gasoline supplied and demanded at various prices in a country. If the government sets a
price floor of $2.75 on a gallon of gasoline, what is the price per gallon?
(A)$2.75
(B)$3.00
(C)$3.25
(D)$3.50
(E)$3.75
If a government eliminated an effective price floor in a market, all of the following would occur EXCEPT:
(A)The surplus would be eliminated.
(B)The price would decrease.
(C)The quantity supplied would decrease.
(D)The quantity demanded would increase.
(E)The supply of the good would increase.
This diagram depicts demand and supply curves in a city’s rental housing market. If a price ceiling of $1,000 is imposed
on the market, which of the following will occur?
(A)There will be a surplus of rental housing in the city.
(B)The demand curve for housing will shift to the right.
(C)The supply curve for housing will shift to the right.
(D)The quantity of rental housing supplied will decrease.
(E)The quantity of rental housing demanded will increase.
If the market depicted in this diagram is initially in equilibrium, which of the following will result from the government’s
setting a price ceiling at P3?
(A)Quantity demanded will exceed quantity supplied.
(B)Quantity supplied will exceed quantity demanded.
(C)Market price will increase.
(D)Market price will be unaffected.
(E)Market price will decrease.
If the government imposes a tariff on imports of wine, how will the price and quantity of imported wine change?
(A)Price = Go Down ; Quantity = Go Down
(B)Price = Go Down ; Quantity = Go Up
(C)Price = Go Up ; Quantity = Won’t Change
(D)Price = Go Up ; Quantity = Go Up
(E)Price = Go Up ; Quantity = Go Down
If the government imposes a price ceiling of $2 per gallon on milk, which of the following will result?
(A)A shortage of 60 gallons
(B)A surplus of 60 gallons
(C)A surplus of 120 gallons
(D)A shortage of 120 gallons
(E)The market would reach equilibrium because the price ceiling would not be effective
Following a big snow storm, the price of snow shovels normally increases significantly. If the government passed laws
preventing price increases for snow shovels, during snow storms such laws would most likely
(A)increase availability of snow shovels
(B)shift the demand curve for snow shovels to the left
(C)create a shortage of snow shovels
(D)shift the supply curve for snow shovels to the right
(E)not change how many snow shovels are made available
Assume an upward sloping supply curve and a downward sloping demand curve in the market for a product. How will
the implementation of a sales tax on this product impact the producer surplus, the consumer surplus, and the total
surplus?
(A)Producer Surplus = Goes Up ; Consumer Surplus = Goes Down ; Total Surplus = Goes Down
(B)Producer Surplus = Goes Up ; Consumer Surplus = Goes Down ; Total Surplus = Goes Up
(C)Producer Surplus = Goes Down ; Consumer Surplus = Goes Down ; Total Surplus = Goes Down
(D)Producer Surplus = Goes Down ; Consumer Surplus = Goes Up ; Total Surplus = Goes Down
(E)Producer Surplus = Goes Up ; Consumer Surplus = Goes Up ; Total Surplus = Goes Up
If a price ceiling is set at P4, what areas represent each of the following values?
(A)Consumer Surplus = a ; Producer Surplus = f ; Deadweight Loss = g + h
(B)Consumer Surplus = a + b + c ; Producer Surplus = f + g ; Deadweight Loss = c + e
(C)Consumer Surplus = a + b + d ; Producer Surplus = f ; Deadweight Loss = c + e
(D)Consumer Surplus = a + b + c ; Producer Surplus = d + e + f ; Deadweight Loss = g + h
(E)Consumer Surplus = a + b + d ; Producer Surplus = c + e ; Deadweight Loss = g + h
Assume that the government increases the unit excise tax on insulin suppliers and also that people are getting diabetes
at a faster rate. As a result, the equilibrium price and quantity of insulin will most likely change in which of the following
ways?
(A)Price = Go up ; Quantity = Indeterminate
(B)Price = Go up ; Quantity = Go down
(C)Price = Go up ; Quantity = Go up
(D)Price = Go down ; Quantity = Go down
(E)Price = Indeterminate ; Quantity = Go up
What will happen if the government implements a price floor above the equilibrium price of a good?
(A)The quantity sold will exceed the equilibrium quantity.
(B)Firms' total revenues will increase if demand is price elastic.
(C)Price > marginal cost of producing the last unit sold.
(D)All firms will shut down, since price is above the equilibrium price.
(E)There will be a surplus in the market.
If a price floor is set at A, what will happen to the value of quantity demanded?
(A)increase from OC to OD
(B)decrease from OD to OC
(C)increase from OC to OE
(D)decrease from OE to OC
(E)not change
This graph shows the supply and demand curves for milk. If the government establishes a price ceiling of $12 per gallon,
what will happen?
(A)A shortage of 90 million gallons
(B)Neither a surplus nor a shortage
(C)A shortage of 10 million gallons
(D)A surplus of 10 million gallons
(E)A shortage of 20 million gallons
A long-run surplus of a product will occur when which of the following goes up?
(A)The price, if it was already set by law above the equilibrium price
(B)The number of producers of the product
(C)The product’s demand
(D)The costs of production
(E)The expected price in the future