Principles of Macroeconomics, 9e tb1 (Case/Fair/Oster)




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Principles of Macroeconomics, 9e - TB1 (Case/Fair/Oster)

Chapter 4



Demand and Supply Applications

4.1



The Price System: Rationing and Allocating Resources

1



Multiple Choice

1)



In the short run, it is necessary to non-price ration a good whenever ________ exists.

A)



excess demand

B)



excess supply

C)



a surplus

D)



market equilibrium

Answer:



A

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking

2)



Among the methods of nonprice rationing are

A)



coupons.

B)



favored customers.

C)



waiting in line.

D)



all of the above

Answer:



D

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

3)



The price system

A)



automatically distributes scarce goods.

B)



is inefficient.

C)



requires government help to allocate goods.

D)



is the only way to allocate goods.

Answer:



A

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking

4)



Attempts to bypass price rationing in the market

A)



are efficient.

B)



are easily administered.

C)



are costly.

D)



always fail.

Answer:



C

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking


5)



Favored customers are customers who receive special treatment from dealers during periods of

A)



excess demand.

B)



excess supply.

C)



price above equilibrium.

D)



equilibrium.

Answer:



A

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Definition

6)



In a "black market"

A)



suppliers take advantage of buyers.

B)



price is illegally below market price.

C)



illegal trading at market prices takes place.

D)



only illegal goods and services are traded.

Answer:



C

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Definition

7)



When supply is fixed or the product is unique, then price is

A)



supply determined.

B)



demand determined.

C)



government determined.

D)



indeterminate.

Answer:



B

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking

8)



If the government imposes a maximum price that is above the equilibrium price,

A)



this maximum price will have no economic impact.

B)



quantity demanded will be less than quantity supplied.

C)



demand will be greater than supply.

D)



the available supply will have to be rationed with a nonprice rationing mechanism.

Answer:



A

Diff: 1

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking

9)



People scalping tickets for a jazz festival will be successful at selling the tickets for a profit

A)



any time the jazz festival is popular.

B)



when the price set by the festival organizers is less than the market equilibrium price.

C)



when prices are too high.

D)



only when there is excess supply.

Answer:



B

Diff: 1

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking

10)



People scalping tickets for the Super Bowl will be successful at selling the tickets for a profit

A)



any time the Super Bowl is popular.

B)



when prices are too high.

C)



when the price set by the National Football League is less than the market equilibrium price.

D)



only when there is excess supply.

Answer:



C

Diff: 1

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Conceptual

AACSB:



Reflective Thinking

Refer to the information provided in Figure 4.1 below to answer the questions that follow.




Figure 4.1



11)



Refer to Figure 4.1. At the world price of 30 cents per apple the United States imports ________ million apples per day.

A)



2

B)



4

C)



6

D)



10

Answer:



C

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Analytic

AACSB:



Analytic Skills

12)



Refer to Figure 4.1. If a 10-cent-per-apple tax is levied on imported apples, the United States will

A)



import 2 million apples per day.

B)



import 4 million apples per day.

C)



import 6 million apples per day.

D)



import 8 million apples per day.

Answer:



A

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Analytic

AACSB:



Analytic Skills


13)



Refer to Figure 4.1. If the United States levies no taxes on apples, the price of apples in the United States would fall to ________, and the United States would import ________.

A)



20 cents per apple; 10 million apples per day

B)



30 cents per apple; 6 million apples per day

C)



40 cents per apple; 2 million apples per day

D)



The price of apples in the United States after the U.S. government eliminated all taxes on imported apples cannot be determined from this information.

Answer:



B

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Analytic

AACSB:



Analytic Skills

14)



Refer to Figure 4.1. Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple,

A)



the quantity demanded of apples will be reduced by 4 million apples per day.

B)



the quantity of apples supplied by U.S. firms will increase by 6 million apples per day.

C)



the price of apples in the United States will increase to 40 cents per apple.

D)



U.S. imports of apples will increase by 6 million per day.

Answer:



C

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Analytic

AACSB:



Analytic Skills

15)



Refer to Figure 4.1. Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple,

A)



the quantity demanded of apples will be reduced by 2 million apples per day.

B)



the quantity of apples supplied by U.S. firms will increase by 2 million apples per day.

C)



the price of apples in the United States will increase to 40 cents per apple.

D)



all of the above

Answer:



D

Diff: 2

Topic:



The Price System: Rationing and Allocating Resources

Skill:



Analytic

AACSB:



Analytic Skills


Refer to the information provided in Figure 4.2 below to answer the questions that follow.



  1   2   3   4   5

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