Question 1

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2,

Accepted Answer

A) buyers bear a higher burden of the tax in the short run than in the long run. 
B) sellers bear a higher burden of the tax in the short run than in the long run. 
C) buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D) buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run. 
A) buyers bear a higher burden of the tax in the short run than in the long run. 
B) sellers bear a higher burden of the tax in the short run than in the long run. 
C) buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D) buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run.

Question 3

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-1
Panel (a)
Panel (b)    
-Refer to Figure 6-1. The price ceiling shown in panel (b)

Accepted Answer

A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct. 
A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct.

Question 5

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.  
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A) $2. 
B) $3. 
C) $4. 
D) $5. 
A) $2. 
B) $3. 
C) $4. 
D) $5.

Question 6

When policymakers set prices by legal decree, they

Accepted Answer

A) are usually following the advice of mainstream economists. 
B) improve the organization of economic activity. 
C) obscure the signals that normally guide the allocation of society's resources. 
D) are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency. 
A) are usually following the advice of mainstream economists. 
B) improve the organization of economic activity. 
C) obscure the signals that normally guide the allocation of society's resources. 
D) are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.

Question 7

Figure 6-7  
-Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Accepted Answer

A) a price ceiling set at $6 
B) a price ceiling set at $5 
C) a price floor set at $9 
D) a price floor set at $8 
A) a price ceiling set at $6 
B) a price ceiling set at $5 
C) a price floor set at $9 
D) a price floor set at $8

Question 8

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Accepted Answer

A) lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B) the tax raises too little revenue for the government, so it should be eliminated. 
C) firms bear most of the burden of the tax. 
D) workers bear most of the burden of the tax. 
A) lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B) the tax raises too little revenue for the government, so it should be eliminated. 
C) firms bear most of the burden of the tax. 
D) workers bear most of the burden of the tax.

Question 9

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-1
Panel (a)
Panel (b)    
-Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A) panel (a) only 
B) panel (b) only 
C) both panel (a) and panel (b) 
D) neither panel (a) nor panel (b) 
A) panel (a) only 
B) panel (b) only 
C) both panel (a) and panel (b) 
D) neither panel (a) nor panel (b)

Question 12

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A) less than $0.50. 
B) $0.50. 
C) between $0.50 and $1. 
D) $1. 
A) less than $0.50. 
B) $0.50. 
C) between $0.50 and $1. 
D) $1.

Question 13

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Accepted Answer

A) a surplus of 2 units. 
B) a surplus of 4 units. 
C) 12 units sold. 
D) 10 units sold. 
A) a surplus of 2 units. 
B) a surplus of 4 units. 
C) 12 units sold. 
D) 10 units sold.

Question 14

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers. 
A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers.

Question 15

Figure 6-9  
-Refer to Figure 6-9. A price ceiling set at

Accepted Answer

A) $4 will be binding and will result in a shortage of 8 units. 
B) $4 will be binding and will result in a shortage of 16 units. 
C) $7 will be binding and will result in a surplus of 4 units. 
D) $7 will be binding and will result in a surplus of 8 units. 
A) $4 will be binding and will result in a shortage of 8 units. 
B) $4 will be binding and will result in a shortage of 16 units. 
C) $7 will be binding and will result in a surplus of 4 units. 
D) $7 will be binding and will result in a surplus of 8 units.

Question 16

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

Accepted Answer

A) demand is more inelastic than the supply. 
B) supply is more inelastic than the demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments. 
A) demand is more inelastic than the supply. 
B) supply is more inelastic than the demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments.

Question 17

The price received by sellers in a market will decrease if the government

Accepted Answer

A) imposes a binding price floor in that market. 
B) decreases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) increases a binding price floor in that market. 
A) imposes a binding price floor in that market. 
B) decreases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) increases a binding price floor in that market.

Question 18

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Accepted Answer

A) shortage of 2,250 workers. 
B) shortage of 4,500 workers. 
C) surplus of 2,250 workers. 
D) neither a labor shortage nor surplus. 
A) shortage of 2,250 workers. 
B) shortage of 4,500 workers. 
C) surplus of 2,250 workers. 
D) neither a labor shortage nor surplus.

Question 19

Since one effect of rent controls is to reduce the supply of available rental properties,rent controls can contribute to the problems of homelessness in cities with rent controls.
​

Accepted Answer

A) True 
 B)False

Question 20

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Accepted Answer

A) and the price paid by buyers both increase. 
B) increases, but the price paid by buyers decreases. 
C) decreases, but the price paid by buyers increases. 
D) and the price paid by buyers both decrease. 
A) and the price paid by buyers both increase. 
B) increases, but the price paid by buyers decreases. 
C) decreases, but the price paid by buyers increases. 
D) and the price paid by buyers both decrease.

Most economists are in favor of price controls as a way of allocating resources in the economy.

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. The price ceiling shown in panel (b)

When policymakers set prices by legal decree, they

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

A tax on buyers shifts the demand curve and the supply curve.

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.

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Figure 6-9 -Refer to Figure 6-9. A price ceiling set at

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

The price received by sellers in a market will decrease if the government

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Since one effect of rent controls is to reduce the supply of available rental properties,rent controls can contribute to the problems of homelessness in cities with rent controls.

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Exam 6: Supply, Demand, and Government Policies

Most economists are in favor of price controls as a way of allocating resources in the economy.

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. The price ceiling shown in panel (b)

When policymakers set prices by legal decree, they

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

A tax on buyers shifts the demand curve and the supply curve.

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.

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Figure 6-9 -Refer to Figure 6-9. A price ceiling set at

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

The price received by sellers in a market will decrease if the government

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Since one effect of rent controls is to reduce the supply of available rental properties,rent controls can contribute to the problems of homelessness in cities with rent controls. ​

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Since one effect of rent controls is to reduce the supply of available rental properties,rent controls can contribute to the problems of homelessness in cities with rent controls.