CA Chap 06-01

87) The federal government placed an upper limit on human organ prices, which is called a
A) Price floor.
B) Price ceiling.
C) Price support.
D) None of the choices are correct.

88) The price ceiling that the federal government placed on human organs caused
A) An increase in demand.
B) An increase in supply.
C) A shortage.
D) A surplus.

90) If a price ceiling is to be effective, it should be set

A) Below the equilibrium price, and it will create a market shortage.
B) Below the equilibrium price, and it will create a market surplus.
C) Above the equilibrium price, and it will create a market shortage.
D) Above the equilibrium price, and it will create a market surplus.

91) Suppose a hurricane hits Alabama, causing widespread damage to houses and businesses.
The governor of Alabama places price ceilings on all building materials to keep the prices
reasonable. Which of the following is the most likely result?
A) A faster recovery from the storm.
B) More people will be able to purchase building materials.
C) Shortages of building materials and a slower recovery from the storm.
D) The supply of building materials to Alabama will increase.

108) If the government required the actual market price to be fixed at $6 per unit in,
Shifts of Supply and Demand
A) A binding or effective price floor would result.
B) A binding or effective price ceiling would result.
C) A nonbinding or noneffective price ceiling would result.
D) The market would reach equilibrium.

115) If the market wage for fast-food restaurants is $4 and the government enforces a minimum
wage of $7, the unemployment rate will
A) Increase as quantity of labor supplied increases and quantity of labor demanded decreases.
B) Increase as quantity of labor supplied decreases and quantity of labor demanded increases.
C) Increase as quantity of labor supplied increases and quantity of labor demanded increases.
D) Not be affected by the minimum wage.

116) If the market wage for fast-food restaurants is $11 and the government enforces a minimum
wage of $7, the unemployment rate will
A) Increase as quantity of labor supply increases and quantity of labor demand decreases.
B) Increase as quantity of labor supply decreases and quantity of labor demand increases.
C) Increase as quantity of labor supply increases and quantity of labor demand increases.
D) Not be affected by the minimum wage.
155) Scalping is likely to appear when a price is set below equilibrium price by the seller.
TRUE OR FALSE

164) Define a price ceiling and explain how it affects resource allocation in a market. Give a
real-world example of a price ceiling.