Question 1

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 2

Economists generally believe that rent control is

Accepted Answer

A) an efficient and fair way to help the poor. 
B) inefficient but the best available means of solving a serious social problem. 
C) a highly inefficient way to help the poor raise their standard of living. 
D) an efficient way to allocate housing, but not a good way to help the poor. 
A) an efficient and fair way to help the poor. 
B) inefficient but the best available means of solving a serious social problem. 
C) a highly inefficient way to help the poor raise their standard of living. 
D) an efficient way to allocate housing, but not a good way to help the poor.

Question 3

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Accepted Answer

A) Buyers bear the entire burden of the tax. 
B) Sellers bear the entire burden of the tax. 
C) Buyers and sellers share the burden of the tax. 
D) We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination. 
A) Buyers bear the entire burden of the tax. 
B) Sellers bear the entire burden of the tax. 
C) Buyers and sellers share the burden of the tax. 
D) We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.

Question 4

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 5

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Question 6

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A) OPEC raised the price of crude oil in world markets. 
B) U.S. gasoline producers raised the price of gasoline. 
C) the U.S. government maintained a price ceiling on gasoline. 
D) Americans typically commuted long distances. 
A) OPEC raised the price of crude oil in world markets. 
B) U.S. gasoline producers raised the price of gasoline. 
C) the U.S. government maintained a price ceiling on gasoline. 
D) Americans typically commuted long distances.

Question 7

A price floor will be binding only if it is set

Accepted Answer

A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price. 
A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price.

Question 8

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A) the actual tax incidence is unaffected by the legislated tax incidence. 
B) the employer now is required by law to pay more than 50 percent of the tax. 
C) the employee now is required by law to pay more than 50 percent of the tax. 
D) employers are no longer required by law to pay any portion of the tax. 
A) the actual tax incidence is unaffected by the legislated tax incidence. 
B) the employer now is required by law to pay more than 50 percent of the tax. 
C) the employee now is required by law to pay more than 50 percent of the tax. 
D) employers are no longer required by law to pay any portion of the tax.

Question 9

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Question 10

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-30
Panel (a)
Panel (b)     Panel (c)  
-Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

Accepted Answer

A) the market shown in panel (a). 
B) the market shown in panel (b). 
C) the market shown in panel (c). 
D) All of the above are correct. 
A) the market shown in panel (a). 
B) the market shown in panel (b). 
C) the market shown in panel (c). 
D) All of the above are correct.

Question 12

Figure 6-25  
-Refer to Figure 6-25. The amount of the tax per unit is

Accepted Answer

A) $1. 
B) $1.50. 
C) $2. 
D) $3. 
A) $1. 
B) $1.50. 
C) $2. 
D) $3.

Question 13

Under rent control, bribery is a mechanism to

Accepted Answer

A) bring the total price of an apartment (including the bribe) closer to the equilibrium price. 
B) allocate housing to the poorest individuals in the market. 
C) force the total price of an apartment (including the bribe) to be less than the market price. 
D) allocate housing to the most deserving tenants. 
A) bring the total price of an apartment (including the bribe) closer to the equilibrium price. 
B) allocate housing to the poorest individuals in the market. 
C) force the total price of an apartment (including the bribe) to be less than the market price. 
D) allocate housing to the most deserving tenants.

Question 14

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

With a $6 tax per unit, the bu

Question 15

The price paid by buyers in a market will increase if the government

Accepted Answer

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

Question 16

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 17

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Accepted Answer

A) $4 
B) $5 
C) $3 
D) $7 
A) $4 
B) $5 
C) $3 
D) $7

Question 18

A large majority of economists favor eliminating the minimum wage.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 20

A binding price floor (i)
Causes a surplus.
(ii)
Causes a shortage.(iii)
Is set at a price above the equilibrium price.(iv)
Is set at a price below the equilibrium price.

Accepted Answer

A) (i) only 
B) (iii) only 
C) (i) and (iii) only 
D) (ii) and (iv) only 
A) (i) only 
B) (iii) only 
C) (i) and (iii) only 
D) (ii) and (iv) only

Exam 6: Supply, Demand, and Government Policies

A price ceiling set above the equilibrium price causes a surplus in the market.

Economists generally believe that rent control is

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Minimum-wage laws benefit society by creating a surplus of labor.

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

A price floor will be binding only if it is set

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

Figure 6-25 -Refer to Figure 6-25. The amount of the tax per unit is

Under rent control, bribery is a mechanism to

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

The price paid by buyers in a market will increase if the government

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

A large majority of economists favor eliminating the minimum wage.

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

A binding price floor (i) Causes a surplus. (ii) Causes a shortage.(iii) Is set at a price above the equilibrium price.(iv) Is set at a price below the equilibrium price.

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