Question 1

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Accepted Answer

A) True 
 B)False

Question 2

If the government removes a binding price floor from a market, then the price paid by buyers will

Accepted Answer

A) increase, and the quantity sold in the market will increase. 
B) increase, and the quantity sold in the market will decrease. 
C) decrease, and the quantity sold in the market will increase. 
D) decrease, and the quantity sold in the market will decrease. 
A) increase, and the quantity sold in the market will increase. 
B) increase, and the quantity sold in the market will decrease. 
C) decrease, and the quantity sold in the market will increase. 
D) decrease, and the quantity sold in the market will decrease.

Question 3

Table 6-1  
-Refer to Table 6-1. Which of the following price floors would be binding in this market?

Accepted Answer

A) $70 
B) $60 
C) $50 
D) $40 
A) $70 
B) $60 
C) $50 
D) $40

Question 4

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-5  
-Refer to Figure 6-5. If the solid horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A) binding and creates a surplus of 60 units of the good. 
B) binding and creates a surplus of 20 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding, and there will be no surplus or shortage of the good. 
A) binding and creates a surplus of 60 units of the good. 
B) binding and creates a surplus of 20 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding, and there will be no surplus or shortage of the good.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Buyers and sellers always share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A) less than 25 units 
B) 25 units 
C) between 25 units and 50 units 
D) greater than 50 units 
A) less than 25 units 
B) 25 units 
C) between 25 units and 50 units 
D) greater than 50 units

Question 9

Figure 6-10  
-Refer to Figure 6-10. A price ceiling set at

Accepted Answer

A) $6 will be binding and will result in a shortage of 10 units. 
B) $6 will be binding and will result in a shortage of 6 units. 
C) $16 will be binding and will result in a shortage of 10 units. 
D) $16 will be binding and will result in a shortage of 4 units. 
A) $6 will be binding and will result in a shortage of 10 units. 
B) $6 will be binding and will result in a shortage of 6 units. 
C) $16 will be binding and will result in a shortage of 10 units. 
D) $16 will be binding and will result in a shortage of 4 units.

Question 10

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A) $4 
B) between $4 and $7 
C) between $7 and $10 
D) $10 
A) $4 
B) between $4 and $7 
C) between $7 and $10 
D) $10

Question 12

If the demand curve is more price elastic than the supply curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Accepted Answer

The sellers will bea

Question 13

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 14

When a tax is placed on the sellers of a product, buyers pay

Accepted Answer

A) more, and sellers receive more than they did before the tax. 
B) more, and sellers receive less than they did before the tax. 
C) less, and sellers receive more than they did before the tax. 
D) less, and sellers receive less than they did before the tax. 
A) more, and sellers receive more than they did before the tax. 
B) more, and sellers receive less than they did before the tax. 
C) less, and sellers receive more than they did before the tax. 
D) less, and sellers receive less than they did before the tax.

Question 15

​Rent controls can cause

Accepted Answer

A) ​a decline in the quality of housing available for rent. 
B) ​the development of a black market to allocate apartments to renters. 
C) ​longer search times for renters attempting to locate an apartment. 
D) ​all of these are possible results of rent controls. 
A) ​a decline in the quality of housing available for rent. 
B) ​the development of a black market to allocate apartments to renters. 
C) ​longer search times for renters attempting to locate an apartment. 
D) ​all of these are possible results of rent controls.

Question 16

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 17

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A) society faces a short-run tradeoff between unemployment and inflation. 
B) the cost of something is what you give up to get it. 
C) people respond to incentives. 
D) government can sometimes improve on market outcomes. 
A) society faces a short-run tradeoff between unemployment and inflation. 
B) the cost of something is what you give up to get it. 
C) people respond to incentives. 
D) government can sometimes improve on market outcomes.

Question 18

A tax burden falls more heavily on the side of the market that

Accepted Answer

A) has a fewer number of participants. 
B) is more inelastic. 
C) is closer to unit elastic. 
D) is less inelastic. 
A) has a fewer number of participants. 
B) is more inelastic. 
C) is closer to unit elastic. 
D) is less inelastic.

Question 19

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

Accepted Answer

A) and the effective price received by sellers both decrease. 
B) decreases, but the effective price received by sellers increases. 
C) increases, but the effective price received by sellers decreases. 
D) and the effective price received by sellers both increase. 
A) and the effective price received by sellers both decrease. 
B) decreases, but the effective price received by sellers increases. 
C) increases, but the effective price received by sellers decreases. 
D) and the effective price received by sellers both increase.

Question 20

Figure 6-12  
-Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A) the market price will increase to P3. 
B) a surplus will occur at the new market price of P2. 
C) the market price will stay at P1. 
D) a shortage will occur at the new market price of P2. 
A) the market price will increase to P3. 
B) a surplus will occur at the new market price of P2. 
C) the market price will stay at P1. 
D) a shortage will occur at the new market price of P2.

Exam 6: Supply, Demand, and Government Policies

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

If the government removes a binding price floor from a market, then the price paid by buyers will

Table 6-1 -Refer to Table 6-1. Which of the following price floors would be binding in this market?

When a tax is imposed on a good, the result is always a shortage of the good.

Figure 6-5 -Refer to Figure 6-5. If the solid horizontal line on the graph represents a price ceiling, then the price ceiling is

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

Buyers and sellers always share the burden of a tax equally.

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Figure 6-10 -Refer to Figure 6-10. A price ceiling set at

A tax of $1 on sellers always increases the equilibrium price by $1.

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

If the demand curve is more price elastic than the supply curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

When a tax is placed on the sellers of a product, buyers pay

​Rent controls can cause

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

The long-run effects of rent controls are a good illustration of the principle that

A tax burden falls more heavily on the side of the market that

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

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

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

Rent controls can cause

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,