Test Bank For Principles of Economics An Asian Edition 1st Edition by N. Gregory Mankiw
MULTIPLE CHOICE
1. Price controls are usually enacted
a.
as a means of raising revenue for public purposes.
b.
when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
c.
when policymakers detect inefficiencies in a market.
d.
All the above are correct.
ANS: B
PTS: 1 DIF: 1 REF: 6-0 TOP: Price ceilings | Price floors
MSC: Interpretive
2. The presence of price controls in a market is usually an indication that
a.
an insufficient quantity of a good or service was being produced in that market to meet the public’s need.
b.
the usual forces of supply and demand were not able to establish an equilibrium price in that market.
c.
policymakers believed that the price prevailing in that market in the absence of price controls was unfair to buyers or sellers.
d.
policymakers correctly believed that in that market, price controls would generate no inequities of their own.
ANS: C
PTS: 1 DIF: 2 REF: 6-0 TOP: Price ceilings | Price floors
MSC: Interpretive
3. Policymakers are sometimes attracted to price controls because
a.
they view the market’s outcome as inefficient.
b.
they view the market’s outcome as unfair.
c.
it is politically popular to impose price controls in markets in which the demand for the good or service is inelastic.
d.
they are required to do so under the Employment Act of 1946.
ANS: B
PTS: 1 DIF: 2 REF: 6-0 TOP: Price ceilings | Price floors
MSC: Interpretive
4. Price controls
a.
always produce an equitable outcome.
b.
always produce an efficient outcome.
c.
can generate inequities of their own.
d.
produce revenue for the government.
ANS: C
PTS: 1 DIF: 2 REF: 6-0 TOP: Price ceilings | Price floors
MSC: Interpretive
5. Policymakers use taxes
a.
to raise revenue for public purposes but not to influence market outcomes.
b.
both to raise revenue for public purposes and to influence market outcomes.
c.
when they realize that price controls alone are insufficient to correct market inequities.
d.
only in those markets in which the burden of the tax falls clearly on the sellers.
ANS: B
PTS: 1 DIF: 2 REF: 6-0 TOP: Taxes
MSC: Interpretive
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