Question 1

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A) The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B) The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C) In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D) The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly. 
A) The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B) The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C) In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D) The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.

Question 2

Most labor economists believe that the supply of labor is much more elastic than the demand.

Accepted Answer

A) True 
 B)False

Question 3

Price ceilings and price floors that are binding

Accepted Answer

A) are desirable because they make markets more efficient and more fair. 
B) cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. 
C) can have the effect of restoring a market to equilibrium. 
D) are imposed because they can make the poor in the economy better off without causing adverse effects. 
A) are desirable because they make markets more efficient and more fair. 
B) cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. 
C) can have the effect of restoring a market to equilibrium. 
D) are imposed because they can make the poor in the economy better off without causing adverse effects.

Question 4

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A) upward by exactly $2.00. 
B) upward by less than $2.00. 
C) downward by exactly $2.00. 
D) downward by less than $2.00. 
A) upward by exactly $2.00. 
B) upward by less than $2.00. 
C) downward by exactly $2.00. 
D) downward by less than $2.00.

Question 5

If a price ceiling is not binding, then

Accepted Answer

A) the equilibrium price is above the price ceiling. 
B) the equilibrium price is below the price ceiling. 
C) it has no legal enforcement mechanism. 
D) None of the above is correct because all price ceilings must be binding. 
A) the equilibrium price is above the price ceiling. 
B) the equilibrium price is below the price ceiling. 
C) it has no legal enforcement mechanism. 
D) None of the above is correct because all price ceilings must be binding.

Question 6

Figure 6-26  
-Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

Accepted Answer

A) $8. 
B) $16. 
C) $14. 
D) $12. 
A) $8. 
B) $16. 
C) $14. 
D) $12.

Question 7

Table 6-2  
-Refer to Table 6-2. A price floor set at $5 will

Accepted Answer

A) be binding and will result in a surplus of 50 units. 
B) be binding and will result in a surplus of 250 units. 
C) be binding and will result in a surplus of 300 units. 
D) not be binding. 
A) be binding and will result in a surplus of 50 units. 
B) be binding and will result in a surplus of 250 units. 
C) be binding and will result in a surplus of 300 units. 
D) not be binding.

Question 8

The incidence of a tax falls more heavily on

Accepted Answer

A) consumers than producers if demand is more inelastic than supply. 
B) producers than consumers if supply is more inelastic than demand. 
C) consumers than producers if supply is more elastic than demand. 
D) All of the above are correct. 
A) consumers than producers if demand is more inelastic than supply. 
B) producers than consumers if supply is more inelastic than demand. 
C) consumers than producers if supply is more elastic than demand. 
D) All of the above are correct.

Question 9

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 10

A tax imposed on the sellers of a good will raise the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Question 11

Figure 6-26  
-Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Accepted Answer

A) $8. 
B) $16. 
C) $14. 
D) $12. 
A) $8. 
B) $16. 
C) $14. 
D) $12.

Question 12

Figure 6-31  
-Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul

Question 13

The quantity sold in a market will increase if the government

Accepted Answer

A) decreases a binding price floor in that market. 
B) decreases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) More than one of the above is correct. 
A) decreases a binding price floor in that market. 
B) decreases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) More than one of the above is correct.

Question 14

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

Accepted Answer

A) $80 
B) $70 
C) $60 
D) $50 
A) $80 
B) $70 
C) $60 
D) $50

Question 15

Figure 6-23  
-Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

Accepted Answer

A) $18. 
B) $30. 
C) $6. 
D) $36. 
A) $18. 
B) $30. 
C) $6. 
D) $36.

Question 16

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price ceiling at $6, it would be

Accepted Answer

A) binding if market demand is Demand A or Demand B. 
B) non-binding if market demand is Demand A or Demand B. 
C) binding if market demand is Demand A and non-binding if market demand is Demand B. 
D) non-binding if market demand is Demand A and binding if market demand is Demand B. 
A) binding if market demand is Demand A or Demand B. 
B) non-binding if market demand is Demand A or Demand B. 
C) binding if market demand is Demand A and non-binding if market demand is Demand B. 
D) non-binding if market demand is Demand A and binding if market demand is Demand B.

Question 18

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-32  
-Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 20

The tax incidence depends on whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Which of the following statements about the effects of rent control is correct?

Most labor economists believe that the supply of labor is much more elastic than the demand.

Price ceilings and price floors that are binding

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

If a price ceiling is not binding, then

Figure 6-26 -Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

The incidence of a tax falls more heavily on

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

A tax imposed on the sellers of a good will raise the

Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

The quantity sold in a market will increase if the government

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

Figure 6-23 -Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

A binding price floor causes a shortage in the market.

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price ceiling at $6, it would be

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

The tax incidence depends on whether the tax is levied on buyers or sellers.

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

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