Refer to Figure 4-12 which shows the market for vitamins. Suppose the government imposes a price ceiling of Pv. How will the price ceiling affect the quantity supplied, quantity demanded, and quantity exchanged?
What will be an ideal response?
The price ceiling will have no effect on the market outcome. An effective price ceiling must lie below the free market equilibrium. Thus, in this case the market outcome will be determined by forces of demand and supply.
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Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the graph below. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph. 
At a price of $15 (the price at which the two demand curves intersect), the price elasticity of demand for the new drug is ________ the price elasticity of demand for the over-the-counter pain reliever.
A. less than B. the same as C. greater than D. the reciprocal of
In the mid-1990s, cattle ranchers in the United States kept raising cattle even though prices were at a ten-year low and below average total cost. What is the likely explanation for this?
A) The ranchers were hoping to receive government subsidies. B) The exit costs were too high. C) Continuing to operate resulted in smaller losses than would have been incurred by shutting down. D) Cattle is an important source of protein and its production is essential for the United States.
A 2005 quarter is called token money because: a. it is legal tender
b. its metal value exceeds its face value. c. there is less than a quarter's worth of metal in it. d. it can be used in the subway. e. it is generally not accepted in exchange.
A single firm in pure competition in the short run has a:
A. vertical demand curve. B. horizontal demand curve. C. horizontal supply curve. D. vertical supply curve.