© 2013 Pearson

7 Government Actions in Markets CLICKER QUESTIONS 2

Checkpoint 7.1 Checkpoint 7.2 Checkpoint 7.3 Question 1 Question 4

CHECKPOINT 7.1 Question 1 A price ceiling is a government regulation that makes it illegal to charge a price _______. below the equilibrium price above the equilibrium price above what most people can afford above some specified level that differs from the market equilibrium price Answer: D

CHECKPOINT 7.1 Question 2 If the government imposes a rent ceiling of $400 a month in the housing market shown, it will create a shortage of 2,000 units. a shortage of 4,000 units. a surplus of 2,000 units. a surplus of 4,000 units. no shortage or surplus of units. Answer: B

Question 3 CHECKPOINT 7.1 Rent ceilings ________. will help eliminate the problem of scarcity allocate resources efficiently ensure that housing goes to the poorer people benefit the people who live in rent-controlled apartments benefit landlords because they know what rent to charge their tenants Answer: D

CHECKPOINT 7.2 Question 4 A minimum wage set above the equilibrium wage rate _____. increases the quantity of labor services supplied but does not change the quantity of labor demanded decreases the quantity of labor services demanded but does not change the quantity of labor supplied shifts the labor supply curve rightward shifts the labor demand curve leftward increases the amount of unemployment Answer: E

CHECKPOINT 7.2 Question 5 If a minimum wage is set is above the equilibrium wage rate, _______. the quantity of labor services demanded increases job search activity increases the supply of labor increases unemployment decreases because more workers accept jobs at the higher minimum wage rate the quantity of labor supplied decreases because unemployment increases Answer: B

CHECKPOINT 7.2 Question 6 If a minimum wage is set above the equilibrium wage rate, ________. the outcome in the labor market is inefficient both workers’ and firms’ surpluses shrink resources used in job search increases both options A and C occur options A, B, and C occur Answer: E

CHECKPOINT 7.2 Question 7 If the government increases the minimum wage rate, _________. both employment and unemployment will decrease the deadweight loss will increase fewer resources will be lost in job search the labor market will be more efficient workers’ surplus will increase Answer: B

CHECKPOINT 7.3 Question 8 To keep the market price equal to the price support, the government must ________. buy some of the good produced export some of the good produced receive a subsidy from the producers insure that imports are readily available be careful to always set the price support below the equilibrium price Answer: A

CHECKPOINT 7.3 Question 9 The figure shows a price support program in an agricultural market. The amount of the subsidy necessary to keep the price at the support price is _______. Answer: D $4 a ton $32,000 $8,000 $16,000 $24,000

Question 10 CHECKPOINT 7.3 A price support with a subsidy ____ . increases consumer surplus, and the quantity produced is efficient increases producer surplus, but the quantity produced is inefficient increases both consumer surplus and producer surplus lowers producers’ marginal cost of production and does not create a deadweight loss does not create a surplus, so the quantity produced is efficient Answer: B