2304S08-x2 - 2304S08-x2 Multiple Choice Identify the choice...

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2304S08-x2 Multiple Choice Identify the choice that best completes the statement or answers the question. Figure 6-4 1. Refer to Figure 6-4 . Suppose a price floor of $7.00 is imposed. As a result, a. the quantity of the good demanded decreases by 20 units. b. buyers’ total expenditure on the good decreases by $20.00. c. the supply curve will shift to the left so as to now pass through the point (Q = 40, P = $7.00). d. the price of the good continues to serve as the rationing mechanism. 2. Which of the following is not a characteristic of a perfectly competitive market? a. There are many sellers. b. Each seller possesses market power. c. Buyers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market. 3. The presence of price controls in a market usually is an indication that a. the usual forces of supply and demand were not able to establish an equilibrium price in that market. b. an insufficient quantity of a good or service was being produced in that market to meet the public’s need. c. policymakers correctly believed that, in that market, price controls would generate no in- equities of their own. d. policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 4. Which of the following expressions is valid for the price elasticity of demand? a. Price elasticity of demand = b. Price elasticity of demand =
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Price elasticity of demand = d. Price elasticity of demand = 5. A competitive market is one in which a. there are many sellers and they compete with one another in such a way that some sellers are always being forced out of the market. b. there are many sellers and each seller has the ability to set the price of his product. c. there are so many buyers and so many sellers that each has a negligible impact on the price of the product. d. there is only one seller, but there are many buyers. 6. The typical study on the effect of the minimum wage on teenage employment finds that a 10 percent increase in the minimum wage a. depresses teenage employment by 10 to 13 percent. b. raises wages of teenagers by 10 percent. c. has no effect on teenage employment. d. depresses teenage employment by 1 to 3 percent. 7. If a surplus exists in a market we know that the actual price is a. below equilibrium price and quantity demanded is greater than quantity supplied. b. below equilibrium price and quantity supplied is greater than quantity demanded. c. above equilibrium price and quantity supplied is greater than quantity demanded. d. above equilibrium price and quantity demanded is greater than quantity supplied. Figure 7-2 8. Refer to Figure 7-2 . Which area represents consumer surplus at a price of P 2 ? a.
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This note was uploaded on 09/24/2008 for the course ECON 2304 taught by Professor Majumder during the Spring '07 term at University of Houston.

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2304S08-x2 - 2304S08-x2 Multiple Choice Identify the choice...

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