Economics true false

TRUE/FALSE

1. Economic
policies often have effects that their architects did not intend or anticipate.

2. Rent-control
laws dictate a minimum rent that landlords may charge tenants.

3. Minimum-wage
laws dictate the lowest wage that firms may pay workers.

4. Price
controls are usually enacted when policymakers believe that the market price of
a good or service is unfair to buyers or sellers.

5. Price
controls can generate inequities.

6. Policymakers
use taxes to raise revenue for public purposes and to influence market
outcomes.

7. If
a good or service is sold in a competitive market free of government
regulation, then the price of the good or service adjusts to balance supply and
demand.

8. At
the equilibrium price, the quantity that buyers want to buy exactly equals the
quantity that sellers want to sell.

9. A
price ceiling is a legal minimum on the price at which a good or service can be
sold.

10. A
price ceiling set above the equilibrium price is not binding.

11. If
a price ceiling is not binding, then it will have no effect on the market.

12. To
be binding, a price ceiling must be set above the equilibrium price.

13. A
price ceiling set below the equilibrium price is binding.

14. A
price ceiling set below the equilibrium price causes quantity demanded to
exceed quantity supplied.

15. A
price ceiling set above the equilibrium price causes quantity demanded to
exceed quantity supplied.

16. A
binding price ceiling causes quantity demanded to be less than quantity
supplied.

17. A
price ceiling set below the equilibrium price causes a shortage in the market.

18. A
price ceiling set above the equilibrium price causes a surplus in the market.

19. A
binding price ceiling causes a shortage in the market.

20. When
a binding price ceiling is imposed on a market for a good, some people who want
to buy the good cannot do so.

21. Long
lines and discrimination are examples of rationing methods that may naturally
develop in response to a binding price ceiling.

22. Price
ceilings are typically imposed to benefit buyers.

23. Binding
price ceilings benefit consumers because they allow consumers to buy all the
goods they demand at a lower price.

24. All
buyers benefit from a binding price ceiling.

25. A
binding price ceiling may not help all consumers, but it does not hurt any
consumers.

26. When
the government imposes a binding price ceiling on a competitive market, a
surplus of the good arises, and sellers must ration the scarce goods among the
large number of potential buyers.

27. The
rationing mechanisms that develop under binding price ceilings are usually
inefficient.

28. Price
is the rationing mechanism in a free, competitive market.

29. Prices
are inefficient rationing devices.

30. When
free markets ration goods with prices, it is both efficient and impersonal.

31. When
a free market for a good reaches equilibrium, anyone who is willing and able to
pay the market price can buy the good.

32. If
a price ceiling of $2 per gallon is imposed on gasoline, and the market
equilibrium price is $1.50, then the price ceiling is a binding constraint on
the market.

33. If
a price ceiling of $1.50 per gallon is imposed on gasoline, and the market
equilibrium price is $2, then the price ceiling is a binding constraint on the
market.

34. A
price ceiling caused the gasoline shortage of 1973 in the United States.

35. One
common example of a price ceiling is rent control.

36. The
goal of rent control is to help the poor by making housing more affordable.

37. Economists
argue that rent control is a highly efficient way to help the poor raise their
standard of living.

38. Because
supply and demand are inelastic in the short run, the initial shortage caused
by rent control is large.

39. The
primary effect of rent control in the short run is to reduce rents.

40. The
housing shortages caused by rent control are larger in the long run than in the
short run because both the supply of housing and the demand for housing are
more elastic in the long run.

41. The
effects of rent control in the long run include lower rents and lower-quality
housing.

42. Rent
control may lead to lower rents for those who find housing, but the quality of
the housing may also be lower.

43. In
a free market, the price of housing adjusts to eliminate the shortages that
give rise to undesirable landlord behavior.

44. A
price floor is a legal minimum on the price at which a good or service can be
sold.
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45. A
price floor set above the equilibrium price is not binding.

46. If
a price floor is not binding, then it will have no effect on the market.
:
47. To
be binding, a price floor must be set above the equilibrium price.

48. A
price floor set below the equilibrium price is binding.
:

49. A
price floor set below the equilibrium price causes quantity supplied to exceed
quantity demanded.

50. A
price floor set above the equilibrium price causes quantity supplied to exceed
quantity demanded.

51. A
binding price floor causes quantity supplied to be less than quantity demanded.

52. A
price floor set below the equilibrium price causes a surplus in the market.

53. A
price floor set above the equilibrium price causes a surplus in the market.

54. A
binding price floor causes a shortage in the market.

55. When
a binding price floor is imposed on a market for a good, some people who want
to sell the good cannot do so.

56. Discrimination
is an example of a rationing mechanism that may naturally develop in response
to a binding price floor.

57. Price
floors are typically imposed to benefit buyers.

58. Binding
price floors benefit sellers because they allow sellers to sell all the goods
they want at a higher price.

59. Not
all sellers benefit from a binding price floor.

60. A
binding price floor may not help all sellers, but it does not hurt any sellers.

61. The
rationing mechanisms that develop under binding price floors are usually
efficient.

62. When
a free market for a good reaches equilibrium, anyone who is willing and able to
sell at the market price can sell the good.

63. If
the equilibrium price of an airline ticket is $400 and the government imposes a
price floor of $500 on airline tickets, then fewer airline tickets will be sold
than at the market equilibrium.

64. If
the equilibrium price of an airline ticket is $500 and the government imposes a
price floor of $400 on airline tickets, then fewer airline tickets will be sold
than at the market equilibrium.

65. One
common example of a price floor is the minimum wage.

66. The
goal of the minimum wage is to ensure workers a minimally adequate standard of
living.

67. The
United States
is the only country in the world with minimum-wage laws.

68. States
in the U.S.
may mandate minimum wages above the federal level.

69. In
the labor markets, workers determine the supply of labor and firms determine
the demand.

70. In
an unregulated labor market, the wage adjusts to balance labor supply and labor
demand.

71. A
binding minimum wage causes the quantity of labor demanded to exceed the
quantity of labor supplied.

72. A
binding minimum wage creates unemployment.

73. A
binding minimum wage may not help all workers, but it does not hurt any workers.

74. A
binding minimum wage raises the incomes of those workers who have jobs, but it
lowers the incomes of workers who cannot find jobs.

75. The
economy contains many labor markets for different types of workers.