Test Bank For Principles of Economics International 10th Edition by Roger A. Arnold
Chapter 4—Prices: Free, Controlled, and Relative
MULTIPLE CHOICE
1. A price ceiling is a government-mandated
a.
minimum price below which legal trades cannot be made.
b.
maximum price above which legal trades cannot be made.
c.
minimum price above which legal trades cannot be made.
d.
maximum price below which legal trades cannot be made.
ANS: B PTS: 1 DIF: Moderate NAT: Analytic
LOC: Supply and demand
2. Which of the following would not result from a price ceiling (set below equilibrium price)?
a.
a shortage
b.
fewer exchanges
c.
an increase in supply
d.
nonprice rationing devices
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: Supply and demand
3. Suppose the government imposes a price ceiling on a good above its equilibrium price. Which of the following is a likely result?
a.
Some other rationing device will emerge to allocate the good among buyers.
b.
Some buyers and sellers will be willing to risk breaking the law in order to exchange the goods.
c.
No change will occur in the market.
d.
There may be buyers who are willing to pay quite high prices so they can consume more than what they are consuming now.
e.
a, b, and d
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: Supply and demand
4. Suppose you live in New York City and the government has imposed price ceilings on apartment rental rates. You want to rent an apartment from Smith, who says that unless you buy the furniture in the apartment for $4,000, he cannot rent the apartment to you. The condition of buying the furniture could be considered
a.
a price ceiling.
b.
a price floor.
c.
a tie-in sale.
d.
something no renter would agree to.
e.
c and d
ANS: C PTS: 1 DIF: Moderate NAT: Analytic
LOC: Supply and demand
5. Jake is an excellent barber. However, all customers who come to him for a haircut must buy a bottle of shampoo. This type of arrangement is known as
a.
a tie-in sale.
b.
a sweetheart deal.
c.
an exclusive contract.
d.
a cross subsidy.
ANS: A PTS: 1 DIF: Easy NAT: Analytic
LOC: Supply and demand
Exhibit 4-1
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