Chapter 4 Reading Quiz - ECON 2301 PDF

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Chapter 4 Reading Quiz - ECON 2301...

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ECON-2301

Reading Quiz – Chapter 4 Questions and Answers 1) Question: An import quota is a supply restriction that prohibits the importation of more than a specified quantity of a particular good in a one-year period. Answer: True

2) Question: When both supply and demand curves change, the outcome is definite for both equilibrium price and equilibrium quantity. Answer: False 2.5) Question: When both supply and demand decrease, the equilibrium price ________ and the equilibrium quantity ________. Answer: change is uncertain; decreases

3) Question: A black market is a market in which a price-controlled good is sold at an illegally high price. Answer: True 3.5) Question: As long as a price ceiling is ________ the market clearing price, imposing a price ceiling creates a ________. Answer: below; shortage

4) Question: Markets which are temporarily out of equilibrium will always return to equilibrium immediately. Answer: False

5) Question: Rent control is a type of price floor. Answer: False 5.5) Question: Evidence indicates that the group which benefits most from rent ceilings is Answer: upper-income professionals.

ECON-2301

6) Question: If demand increases while supply remains unchanged, the equilibrium price of the product will ________ and the equilibrium quantity will ________. Answer: increase; increase

7) Question: Rationing by the price system leads to the most efficient use of available resources. Answer: True

8) Question: The minimum wage is an example of a price ceiling. Answer: False 8.5) Question: An above-equilibrium minimum wage will result in ________ in the quantity of labor demanded and ________ in the quantity of labor supplied. Answer: a decrease; an increase

9) Question: Middlemen specialize in lowering transaction costs. Answer: True

10) Question: Most of the benefits from agricultural price supports have gone to small, family-owned farms. Answer: False 10.5) Question: As long as a price floor is ________ the market clearing price, imposing a price floor creates a ________. Answer: above; surplus

11) Question: Voluntary exchange refers to an act of trading between individuals that makes both parties to the trade subjectively better off. Answer: True

12) Question: In general, the less organized the market, the lower the transaction costs. Answer: False

ECON-2301...