ECON7100-M50 Spring 2015

Self-Study02

1. Price control will set up a
   1. price ceiling above which the market price cannot rise.
   2. price below the market clearing price.
   3. Both A and B.
   4. price floor below which the market price cannot fall.
2. The whole concept of price gouging is based on the mis-guided idea that
   1. people with more urgent needs should be allowed to express them by their willingness to pay more.
   2. merchandise pricing should be based on opportunity cost rather than historical cost.
   3. people with more urgent needs should not be allowed to express them by their willingness to pay more.
   4. All of the above.
3. Arbitrage occurs whenever prices for similar goods are divergent between markets and it is
   1. Legal to ship the goods from the cheaper market to the more expensive market.
   2. Illegal to ship the goods from the cheaper market to the more expensive market.
   3. Illegal to ship the goods from the more expensive market to the cheaper market.
   4. Both B and C.
4. Drivers generally regard a parking violation ticket as a price because
   1. there is a strong social stigma attached to the violation.
   2. the fee is increased for repeated offense.
   3. there are more adverse consequences than just the fee involved.
   4. there is no further consequences than paying a fee.
5. Scalpers perform a useful function because
   1. they recycle their profits to concert promoters.
   2. they help those who value their tickets more than their money.
   3. they help to reallocate tickets to those who can most afford to pay.
   4. they are primarily concerned that concert promoters would get hurt.
6. When demand increases,
   1. buyers buy a larger quantity at every price.
   2. the whole demand curve shifts to the right.
   3. buyers simply move down the same demand curve
   4. Both A and B.
7. Suppose a gas station got some gas delivery at the pre-Katrina price of $2.00 per gallon. After Katrina, the gas delivery price went up to $2.50. The opportunity cost of its old gas after Katrina
   1. stayed at $2.00 per gallon.
   2. had gone up to $2.50 per gallon.
   3. averaged between $2.00 and $2.50 per gallon.
   4. None of the above.
8. If permits for parking spaces are sold at a price below the market-clearing level,
   1. those who don't pay can still compete for the same parking spaces.
   2. those who pay for the permits would be guaranteed parking spaces.
   3. an allocation system of straight first-come first-served is in force.
   4. both price and time would have to be used to fully allocate the scarce resources
9. If prices are not allowed to adjust to clear the market, prices that are set too low would result in
   1. stable inventory turnover.
   2. no predictable inventory indicator.
   3. depleted inventory (i.e., excess demand or shortage).
   4. excessive inventory (i.e., excess supply or surplus).
10. If permits for parking spaces are sold at a price below the market-clearing level,
    1. an allocation system of straight first-come first-served is in force.
    2. those who don't pay can still compete for the same parking spaces.
    3. those who pay for the permits would be guaranteed parking spaces.
    4. more permits would be sold than there are parking spaces.
11. Surge pricing
    1. enriches Uber only without clearing the market.
    2. limits quantity demanded only.
    3. expands quantity supplied and limits quantity demanded.
    4. expands quantity supplied only.
12. Wheat and corn farmers in Minnesota are indirectly hurt by sugar price support because
    1. Price-supported sugar farmers bid up the rent for farmland.
    2. Wheat farmers cannot easily switch to sugar beets because they are not members of the sugar coop.
    3. They do not enjoy price support of their own crops.
    4. They do not know how to grow sugar beets.
    5. Both A and B.
13. Smuggling occurs whenever prices for similar goods are divergent between markets and it is
    1. illegal to ship the goods from the cheaper market to the more expensive market.
    2. legal to ship the goods from the cheaper market to the more expensive market.
    3. illegal to ship the goods from the more expensive market to the cheaper market.
    4. Both A and B.
14. Price support
    1. decreases quantity demanded and increases quantity supplied.
    2. creates excess supply that is self-correcting.
    3. encourages inefficient producers to stay put instead of exiting.
    4. Both B and C.
    5. Both A and C.
15. When parking spaces are fewer than the number of cars wanting to park, a market-clearing parking fee would generate
    1. smaller total benefit than free parking.
    2. larger consumer surplus than free parking.
    3. just paid benefit with no consumer surplus.
    4. larger total benefit than free parking.
16. Sugar growers succeed in reducing sugar imports because
    1. They are low-cost producers.
    2. They are guaranteed a domestic market at supported prices.
    3. The import quota is stable while domestic output expands.
    4. All of the above.
17. Scalpers owe their existence to
    1. the excess of quantity supplied over quantity demanded.
    2. price support.
    3. correctly set market-clearing prices by concert promoters.
    4. prices that are too low to clear the market.
18. Free parking when parking spaces are scarce would
    1. favor the time poorer but money richer.
    2. generate lower total benefit than paid parking that fully allocates the spaces.
    3. generate higher total benefit than paid parking because those who can't afford parking fee may still be able to get a parking space.
    4. lead to more efficient time allocation among drivers.
19. Uber poses competition to taxi companies because
    1. taxi fares are not tightly regulated.
    2. Uber drivers earns less than taxi drivers.
    3. Uber rides are less expensive than taxi rides.
    4. the number of Uber cars in service can be increased without getting a taxi medallion.
20. If we offer less to sell at every price,
    1. the supply curve must have shifted to the left.
    2. the law of supply must be wrong.
    3. supply must have decreased.
    4. Both A and C.