1. © 2013 Pearson

2. 7
Government Actions in Markets
CLICKER QUESTIONS 2

3. Checkpoint 7.1 Checkpoint 7.2 Checkpoint 7.3 Question 1 Question 4

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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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