If a price floor is a binding constraint on a market, then
sellers cannot sell all they want to sell at the price floor.
The imposition of a binding price ceiling on a market causes quantity demanded to be
greater than quantity supplied.
a minimum wage that is set above a market's equilibrium wage will result in
an excess supply of labor, that is, unemployment.
When a binding price floor is imposed on a market
price no longer serves as a rationing device.
the quantity supplied at the price floor exceeds the quantity that would have been
supplied without the price floor.
only some sellers benefit.
Price controls
can generate inequities of their own.
An example of a price floor is
the minimum wage.
Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?
free gasoline given to people as an incentive to a rent a car
if the government removes a binding price ceiling from a market, then the price paid by buyers will
increase and the quantity sold in the market will increase.
a legal minimum on the price at which a good can be sold is called a price
floor.
The minimum wage is an example of
a price floor.
price ceiling will be binding only if it is set
above the equilibrium price.
Minimum-wage laws dictate
a minimum wage that firms may pay workers.
When a binding price ceiling is imposed on a market to benefit buyers,
some buyers will not be able to buy any amount of the good
Which of the following would be most likely to have the most inelastic demand curve?
paintings by Leonardo da Vinci
If the price of a good is increased by 20% and the quantity demanded changes by 15%, then the price elasticity of demand is equal to:
0.75
Warren Buffet and Bill Gates visited a gas station lately. Before looking at the gasoline price they made this decision. Bill Gates said I will buy exactly 10 gallons of gasoline regardless of the price while Warren Buffet said I will spend $20 on gasolin
0, 1.
If a university decreases the price of tickets to football games to collect more revenue, it is assuming that the demand for tickets is:
price-elastic.
A policy that limits the supply of illegal drugs increases the number of burglaries and robberies because the _____ drugs is_____.
demand for, price inelastic
On the lower portion of a linear demand curve, a decrease of price by 100 percent results in quantity demanded increasing by _____ than 100 percent and total revenue will_____.
less, decrease
Which of the following has the most inelastic price elasticity of demand?
Clothing in general
A linear demand curve:
can have both elastic and inelastic price elasticities of demand.
Demand for vegetables at a small farmers' market is steady (no shift of demand), but the supply of vegetables has decreased due to a drought. This is good news for farmers if demand is:
inelastic and the price effect outweighs the output effect.
Yovanka has diabetes and she will pay any amount of money to buy the insulin she needs to stay alive. Yovanka's price elasticity of demand for insulin is:
perfectly inelastic.
Other things being equal, the price elasticity of demand for a product will be lower:
if there are few or no substitutes available.
Which of the following would be most likely to have a vertical supply curve?
paintings by Leonardo da Vinci
? GDP can be calculated by summing:
total market value of all final goods and services within a country's borders in a given year. B) all factor payments within a country's borders in a given year. C) the value added for all goods and services.
GM builds $600 million worth of cars this year, but consumers buy only $500 million worth of them this year. This transaction increases GDP by:
$600 and investment by $100
As per economists definition which of the following is not investment expenditure?
purchase of Apple's stocks
The income earned by Italian professor working in University of Arkansas is
included in U.S. GNP and Italian GDP.
Changes in real GDP reflect
both changes in prices and changes in the amounts being produced
Nominal GDP is:
the inflation adjusted GDP.
The intermediate goods are not counted in the calculation of GDP, because:
that involves double-counting.
Real per capita GDP is:
real GDP divided by the amount of capital available in the economy.
Which of the following is the best statistics to compare living standards across countries:
Real GDP per capita.
The term inflation is used to describe a situation in which
the overall level of prices in the economy is increasing.
The goal of the consumer price index is to measure changes in the
cost of living.
If both aggregate output and the aggregate price level increase:
nominal GDP will increase faster than real GDP.
The ______ is the most widely used measure of inflation in the United States.
consumer price index
Which of the following is false?
Efficiency wages may cause frictional unemployment.
Suppose that 8 million people in an economy are looking for jobs during one month. The following month, 2 million of those stopped looking for work. What will happen to the unemployment rate, all other things unchanged?
It will fall.
Which of the following statements is false?
Unemployment always falls during expansions.
The unemployment rate is:
the percent of the labor force that is unemployed.
Discouraged workers are those individuals:
who have given up looking for a job.
Unemployment that is due to the time workers spend in job search is considered
frictional unemployment.
Structural unemployment can be caused by all of the following except:
fluctuations in the business cycle.
Which of the following would be most likely to reduce frictional unemployment
creating a sole website that is used by all employers and all job searchers.
Jane just lost her $100,000 job as a professor at U of A. Immediately, she takes a part-time job at McDonald's until she can find another job in her field. Jane can be characterized as _____:
underemployed but she is reported as employed in the labor market statistics.
Menu costs refer to the increased cost of:
changing listed prices
Anticipated inflation affects:
all aspects of the economy.
Unanticipated inflation:
helps borrowers and hurts lenders
The cost of disinflation is:
higher unemployment rates.
If Alex borrows money at a nominal interest rate of 5% and he expects the inflation rate to be 4%, the real interest rate on the money he borrowed is:
1%.
Minimum-wage laws dictate
a minimum wage that firms may pay workers.
A legal maximum on the price at which a good can be sold is called a price
ceiling.
The imposition of a binding price ceiling on a market causes quantity demanded to be
greater than quantity supplied.
Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?
A smaller quantity of the good is bought and sold after the price ceiling becomes effective.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
In response to a shortage caused by the imposition of a binding price ceiling on a market,
price will no longer be the mechanism that rations scarce resources. b. long lines of buyers may develop. c. sellers could ration the good or service according to their own personal biases.
Rent control
serves as an example of a price ceiling.
Economists generally believe that rent control is
a highly inefficient way to help the poor raise their standard of living.
Which of the following is not a result of rent control?
higher quality housing
A price floor is
a legal minimum on the price at which a good can be sold. b. often imposed when sellers of a good are successful in their attempts to convince the
government that the market outcome is unfair without a price floor. c. a source of inefficiency in a market.
A price floor will be binding only if it is set
above the equilibrium price.
if a price floor is a binding constraint on a market, then
sellers cannot sell all they want to sell at the price floor.
When a binding price floor is imposed on a market,
price no longer serves as a rationing device. b. the quantity supplied at the price floor exceeds the quantity that would have been supplied
without the price floor. c. only some sellers benefit.
An example of a price floor is
the minimum wage.
The minimum wage is an example of
a price floor.
A minimum wage that is set above a market's equilibrium wage will result in
an excess supply of labor, that is, unemployment.
When the price of restaurant meals increased by 30 percent, the number of meals demanded decreased by 10 percent. The price elasticity of demand for restaurant meals is _____, and demand is _____.
1/3, inelastic
An important determinant of the price elasticity of demand is the:
availability of substitutes
Which of the following would be most likely to have a vertical demand curve?
insulin for diabetic patients
Which of the following goods is likely to have the largest price elasticity of demand
a green Cannondale mountain bike
When a public transit system (such as a subway or bus line) raises its fares, it may experience an increase in total revenue. This suggests that demand is:
price-inelastic
The ratio of the percentage change in the quantity demanded to the percentage change in price is the:
price elasticity of demand.
Along the upper end of a linear demand curve, the price elasticity of demand will be:
price-elastic.
In the market for computers, if the demand curve is elastic and the price of a computer decreases, we would expect total revenue to ________. If the demand curve is inelastic and the price of a computer decreases, we would expect total revenue to ________
increase; decrease
We know that an increase in demand for a good increases the equilibrium quantity and price. Suppose an increase income result in shift of the demand curve, for which of the following goods will the percentage change in price be relatively higher than the
beach front property which has inelastic supply.
A perfectly elastic supply curve is
horizontal.
The long-run price elasticity of supply of crude oil is ________ the short-run price elasticity of supply of crude oil.
greater than
Discouraged workers are those individuals:
who have given up looking for a job.
The unemployment rate is:
the percent of the labor force that is unemployed.
Structural unemployment can be caused by all of the following except:
minimum wages. B) efficiency wages. D) labor unions.
Unemployment that is due to the time workers spend in job search is considered:
frictional unemployment
Anticipated inflation affects
all aspects of the economy.
A price floor is
often imposed when sellers of a good are successful in their attempts to convince the
government that the market outcome is unfair without a price floor. B) a source of inefficiency in a market. C) a legal minimum on the price at which a good can be sold.
One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?
He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.
Suppose the government has imposed a price ceiling on televisions. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?
The number of firms selling televisions decreases.
The quantity sold in a market will decrease if the government
decreases a binding price ceiling in that market.
If the amount produced of a good is more than that would occur at market equilibrium, then
the allocation of resources is inefficient.
An example of a price ceiling is
rent control
Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?
A smaller quantity of the good is bought and sold after the price ceiling becomes effective.
A legal maximum on the price at which a good can be sold is called a price
ceiling.
The price elasticity of demand can be found by:
comparing the percentage change in quantity demanded to the percentage change in price.
Each month Jessica buys exactly 200 Big Macs regardless of the price. Jessica's price elasticity of demand for Big Macs is:
perfectly inelastic
The mayor advocates raising the entrance fee at the city's pools to increase revenue for the city. The mayor will be successful in her plan only if
demand is inelastic
The difference between slope and elasticity is that
slope is a ratio of two changes, and elasticity is a ratio of two percentage changes.
For which of the following goods would demand be most elastic?
Tommy Hilfiger jeans
Total revenue
remains unchanged as price increases when demand is unit elastic.
Suppose that when the price of beer is $2 per bottle, firms can sell 4 million bottles. When the price of beer is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?
The demand for beer is price elastic, and so an increase in the price of beer will decrease the total revenue of beer producers.
Suppose the price elasticity of demand for fishing lures equals 2 in South Carolina and 0.5 in Alabama. To increase revenue, fishing lure manufacturers should:
lower prices in South Carolina and raise prices in Alabama.
The price elasticity of demand for a good such as foreign vacation is likely to be very high because:
foreign vacation is considered a luxury.
The short-run price elasticity of supply of crude oil is ______ the long-run price elasticity of supply of crude oil.
less elastic than
Nominal GDP
has not been adjusted for changes in prices over time.
Which of the following would NOT be included in this year's GDP?
your purchase of your neighbor's sedan car
Gross Domestic Product can be defined as:
consumer spending + government purchases + investment spending + exports - imports.
Investment spending represents spending on:
productive physical capital.
Macroeconomics is nothing but a simple aggregation of all the microeconomic parts." Do you or do you not agree with this statement?
don't agree, because there is a lot more to the study of macroeconomics than the sum of its individual microeconomic parts
If one wants to compare living standards of typical American in 1900 to that of typical American in 2012, one should compare the _______ for both these years.
Real GDP per capita of the United States.
The rate of inflation in an economy can be calculated from all of the following EXCEPT:
Dow index
Darla, a Canadian citizen, works only in the United States. The value of the output she produces is
included in U.S. GDP, but it is not included in U.S. GNP.
In the CPI, goods and services are weighted according to
how much consumers buy of each good or service.
The inflation rate you are likely to hear on the nightly news is calculated from
the CPI.
If an economy's GDP falls, then it must be the case that the economy's
income and expenditure both fall.
If 2002 is the base year, then the inflation rate between 2004 and 2005 equals
(2005cpi-2004cpi)/2004cpi * 100
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
increased measured GDP by the full value of the restaurant meals.
The consumer price index is used to
monitor changes in the cost of living over time.
The CPI is a measure of the overall cost of the goods and services bought by
a typical consumer.