- 1 The June 9 2022 Wall Street Journal Reports That Wheat Prices Will Continue To Rise This Year Which Of The Followi 1 (132.55 KiB) Viewed 12 times
5. The theory offered up by Jean Baptiste Say because a. Always holds true; As prices increase, new suppliers enter a market leading to an increase in supply and lower prices over time. b. Always holds true; Entrepreneurs are the key to income creation and therefore the ultimate demand for all goods and services. c. Is often true; The law of demand, which shows that as prices increase, quantity demanded will fall, but quantity supplied will rise. d. Is rarely true; As the demand for goods and services increase, prices rise, and supply will increase. e. Is often, but not always true; Through the coordinated activities of government agencies, adequate supplies of food, clothing and shelter will exist. 6. The June 3, 2022, Wall Street Journal reports that electric utilities are facing rapidly rising coal prices. Which role of prices will utilities experience in this market? a. The rationing role which states that as prices rise, demand will fall, and fewer utilities will exist. b. The Coase Theorem and Say's Law that shows how utilities can deal with market failures. c. The information role that teaches us how rising prices conveys a message that prices were above equilibrium right before they began to rise. d. The rationing role of prices which discriminates based on the utilities ability to pay for coal. e. The information role of prices where the information being conveyed is that the market is failing. 7. The June 6, 2022, Wall Street Journal reports that stores like Ross, Macy's and Gap are facing huge surpluses of clothing inventory. This means: a. There had been a shortage right before the surpluses emerged. b. The information being conveyed is that the price of clothing in these stores is above equilibrium Now, because of this information the invisible hand will push prices down. c. Quantity demanded is greater than quantity supplied so prices will most likely rise this summer. d. The rationing role of prices will still exist as prices start to fall, but there will be less discrimination based on ability to pay over the rest of the summer than there was in the spring. e. B and D only. 8. When Adam Smith talked about "the invisible hand" he argued that: a. High transaction costs normally prevent markets from achieving equilibrium. b. Prices, in the long run, end up where both fairness and efficiency are achieved. c. Changing prices leads to an "end" which buyers and sellers are not totally pleased with, but one that is efficient. d. Create mutually agreed upon prices over time if the market is subsidized. e. Does not work as well as price ceilings and floors, which tend to promote more efficient outcomes.
9. The state of Minnesota rations camping sites on a first come, first served system. This has led and is to what America did during World War II. Venezuela to distribute food which is to what Minnesota does with to on camping sites. a. An increase in the demand for camping sites and a decrease in supply; not similar; relies; prices; similar b. A surplus of camping sites and downward pressure on prices; similar to; does not rely; non-price rationing; similar c. The state failing to maximize revenue from this shortage-creating system; similar to; does not rely; prices; similar d. The opportunity cost of wasted time for many would-be campers; similar to; refuses to rely; the invisible hand; similar e. C and D only. 10. An increase in the minimum wage to $15 per hour would drive wages equilibrium for low-level workers at Wal-Mart in poorer urban areas and would market for the same type of workers in Williston, North Dakota. a. Below; have no impact on b. Above; have no impact on c. Below; cause unemployment d. Above; cause unemployment e. None of the above market the 11. Which of the following is the clearest example (according to the lessons of Adam Smith) of when government should attempt to interfere, in some manner, with a market outcome? a. When people refuse to get vaccinated for the Covid-19 virus and therefore expose others to possible infection or when they purchase offensive tattoos. b. When market transactions create negative externalities that threaten human lives or property. c. When people engage in price gouging during hurricanes or pandemics. d. When businesses pay wages that are too low to support a family. e. When people allow crab grass to be grown in their yards, destroying property values for their neighbors. 12. Positive externalities, according to economists, often leads to externalities such as leads economists to recommend while negative a. The underproduction of valuable goods and services; second-hand cigarette smoke; taxation or regulation of a market. b. Non-market production and shortages; offensive music; banning the good or service. C. An acceleration of Say's Law; alcohol and marijuana; subsidizing production. d. The Coase Theorem; beautiful flowers planted along a highway; leaving the market alone. e. All of the above.
13. Charter schools in Florida use a lottery to determine which students get in. This means An auction in this case would mean that: that a. There is often a shortage of seats at charter schools; the families who place the highest value on charter school education would be more likely to get a spot. b. Families who would like to pay for the right to get into charter schools do not have the opportunity to act on that desire; the price of a seat would rise from zero to some price above zero. c. Florida charter schools are not maximizing revenue from this system; Florida charter schools would earn greater revenue over time. d. An auction would create an efficient outcome in the market for charter school seats; An arguably "unfair" market outcome could take place. All of the above. e. 14. Current research on kidney transplants (see https://www.organdonor.gov/learn/organ-donation- statistics) shows that 17 people a day die while waiting for an organ. This is because: a. Of the negative externalities that prevent the government from legalizing the buying and selling of organs. b. Because demand is greater than supply, reflecting the fact that people should be more willing to donate their organs. c. Because the rationing role of prices is not legally allowed to work in this instance. d. Because organ prices are so high, most poorer people cannot afford one. e. A and D only. 15. According to the Coase Theorem: a. It is possible for markets to achieve equilibrium without some sort of government involvement when negative externalities occur. b. If transactions costs are low enough, common property can be converted to private property and markets can be created without government. c. Say's Law, when aided by subsidies, can reduce pollution, excessive noise, and other common property problems. d. The invisible hand only works when there is symmetrical information and high transaction costs. e. A and B only 16. There is currently a of fresh water in Florida. This is because the government uses in this market. Therefore, higher prices would a. Surplus; price ceilings; lead to a drop in demand b. Surplus; price floors; not impact demand c. Shortage; price ceilings; lead to a more efficient quantity demanded. d. Shortage; price floors; increase in quantity supplied. e. None of the above
17. In 2021, a certain economics professor wrote about using an auction to create more efficient outcomes in the market for Covid vaccines. The basis for this idea was that: a. People who place a high value on not getting Covid were not allowed to express that value with currency. b. The government (that forced taxpayers to pay for vaccines) would gain more revenue to pay for this endeavor. c. People with a high opportunity cost of wasted time would be able to get a vaccine faster and not waste time in lines. d. People who place the highest value on vaccines would be more likely to bid in an auction format than people for whom vaccines have only marginal importance. e. Adam Smith's invisible hand creates more efficient outcomes than Soviet-era central planning. f. All of the above. 18. Shortages and black markets largely came to an end in the Soviet Union because a. Ronald Reagan showed that the ideas of Jean Baptiste Say, and Adam Smith were more efficient economic models than the ideas put forth by Karl Marx. b. Barack Obama sped up the rate at which the Soviet Union collapsed by making shortages there worse in the short run. c. d. Ronald Reagan modeled his economic policies on what Karl Marx advocated to determine how food would be supplied. e. Donald Trump imposed tariffs on the Soviet economy. Franklin Roosevelt worked with Hugo Chavez to implement price controls on the Soviet economy, leading to the economic collapse occurring today. 19. The March 29, 2022, Wall Street Journal points out that renewed Covid lockdowns in China could lead to lower global oil demand this year. This means we could see the following: a. A decrease in oil prices and, barring a change in supply, lower equilibrium quantities. b. A decrease in oil prices and thus an increase in demand everywhere but China. c. Surpluses, higher oil prices and an increase in quantity supplied over time. d. Shortages and falling prices for oil over time - which leads to an increase in demand. Lower oil prices but no change in the overall quantity. e. 20. In 2021 and 2022 the price of new pickup trucks has risen sharply. This means that in the market for used pickup trucks the following has been observed: a. Due to the rising price of substitutes, the demand for used trucks has increased, causing higher prices in that market too. b. The supply of used pickup trucks has increased, causing lower prices stemming from the increase in the price of substitutes. c. The demand for used trucks has not changed, but quantity demanded has increased. d. The price of used trucks has increased due to the decrease in quantity supplied. e. C and D only.
21. Petroleum is a key input in the production of small plastic containers supermarkets use to store ready- to-eat meals. This means that rising oil prices should cause the following to occur: a. A decrease in the quantity of plastic containers supplied and higher prices. b. A decrease in the supply of plastic containers, higher prices and a decrease in quantity demanded. c. A decrease in the supply of plastic containers, higher prices, and lower demand. d. No change in the supply of containers as long as demand does not change. 22. During the war between Russia and Ukraine millions of Ukrainians have fled into Poland and Hungary. Suppose most of these refugees remain and restart their lives in Poland. In the market for labor the following would likely occur - assuming there is currently a shortage of labor in Poland. a. An increase in the quantity of labor supplied and guaranteed labor surpluses. Higher wages if the shortage is eliminated by the increase in the supply of labor. b. c. An increase in the supply of labor and either a reduced shortage or perhaps even a surplus of labor until wages are pushed down towards equilibrium. d. Huge surpluses of labor if after the increase in supply Poland reaches a market equilibrium it its labor markets. 23. The Wall Street Journal reports that General Mills (a large producer of breakfast cereals) is facing higher wheat prices but also greater consumer tastes for its products. Therefore: a. Demand is rising, supply is falling, and consumers should expect higher prices. b. Quantity demanded is rising, quantity supplied is falling and prices will likely increase. c. Demand is rising, quantity supplied is falling and prices will increase. d. Quantity demanded is rising, supply is falling, and prices will increase. e. None of the above. 24. Recently, St. Paul, Minnesota enacted a rent control law during a time when the demand for apartments was rising in that city and rising labor and construction costs prevailed. This means: a. While rising demand and falling supply were taking place, St. Paul pushed for even higher prices than the invisible hand would create. b. In St. Paul, the invisible hand was pushing for higher prices. Now it is likely that a shortage of apartments exists. c. Because politicians always know better than Adam Smith, this law promoted fairness for all the citizens of this kind, caring city. d. Before the rent control demand shifted to the right, supply to the left and thus rent control will create a surplus in this market. 25. Suppose over the next 10 years the technology associated with producing cell phones advances greatly while the number of buyers in the market increases only slightly. This would mean that: a. The price of cell phones would continue to fall. b. The price of cell phones would not change but quantity would increase. c. Quantity supplied would rise, prices would fall, and demand would increase due to the falling prices. d. The price of landline phones would fall. e. A and D only.