Question 1

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A) demand for gasoline to increase. 
B) demand for gasoline to decrease. 
C) supply of gasoline to increase. 
D) supply of gasoline to decrease. 
A) demand for gasoline to increase. 
B) demand for gasoline to decrease. 
C) supply of gasoline to increase. 
D) supply of gasoline to decrease.

Question 2

Figure 6-2  
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A) causes a shortage of 45 units of the good. 
B) makes it necessary for sellers to ration the good. 
C) is not binding because it is set below the equilibrium price. 
D) causes a shortage of 40 units of the good. 
A) causes a shortage of 45 units of the good. 
B) makes it necessary for sellers to ration the good. 
C) is not binding because it is set below the equilibrium price. 
D) causes a shortage of 40 units of the good.

Question 3

Figure 6-24  
-Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

Accepted Answer

A) buyers bearing the same share of the tax burden. 
B) sellers bearing the same share of the tax burden. 
C) the same amount of tax revenue for the government. 
D) All of the above are correct. 
A) buyers bearing the same share of the tax burden. 
B) sellers bearing the same share of the tax burden. 
C) the same amount of tax revenue for the government. 
D) All of the above are correct.

Question 4

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Accepted Answer

A) increase, and the price received by sellers will increase. 
B) increase, and the price received by sellers will not change. 
C) not change, and the price received by sellers will increase. 
D) not change, and the price received by sellers will not change. 
A) increase, and the price received by sellers will increase. 
B) increase, and the price received by sellers will not change. 
C) not change, and the price received by sellers will increase. 
D) not change, and the price received by sellers will not change.

Question 5

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 6

Table 6-5  
-Refer to Table 6-5. Which of the following price ceilings would be binding in this market?

Accepted Answer

A) $3 
B) $6 
C) $9 
D) None of the above price ceilings would be binding. 
A) $3 
B) $6 
C) $9 
D) None of the above price ceilings would be binding.

Question 7

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible. 
A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible.

Question 8

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

Accepted Answer

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

Question 9

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-24  
-Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Accepted Answer

A) $2. 
B) $4. 
C) $6. 
D) $8. 
A) $2. 
B) $4. 
C) $6. 
D) $8.

Question 11

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Accepted Answer

A) ​a government study that shows that consuming chocolate increases the incidence of cancer. 
B) ​a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate. 
C) ​South American cocoa bean producers refuse to ship to chocolate producers in the US. 
D) ​a sharp drop in consumer income; chocolate is a normal good. 
A) ​a government study that shows that consuming chocolate increases the incidence of cancer. 
B) ​a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate. 
C) ​South American cocoa bean producers refuse to ship to chocolate producers in the US. 
D) ​a sharp drop in consumer income; chocolate is a normal good.

Question 12

When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-5  
-Refer to Figure 6-5. If the solid horizontal line on the graph represents a price floor, then the price floor 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) binding and 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) binding and creates a surplus of 40 units of the good. 
D) not binding, and there will be no surplus or shortage of the good.

Question 14

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Accepted Answer

A) nonbinding price floor on gasoline to become binding. 
B) binding price floor on gasoline to become nonbinding. 
C) nonbinding price ceiling on gasoline to become binding. 
D) binding price ceiling on gasoline to become nonbinding. 
A) nonbinding price floor on gasoline to become binding. 
B) binding price floor on gasoline to become nonbinding. 
C) nonbinding price ceiling on gasoline to become binding. 
D) binding price ceiling on gasoline to become nonbinding.

Question 15

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Accepted Answer

A) $6. 
B) $8. 
C) $14. 
D) $24. 
A) $6. 
B) $8. 
C) $14. 
D) $24.

Question 16

Figure 6-23  
-If a tax is levied on the buyers of dog food, then

Accepted Answer

A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax. 
A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax.

Question 17

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A) decrease by less than $500. 
B) decrease by exactly $500. 
C) decrease by more than $500. 
D) increase by an indeterminate amount. 
A) decrease by less than $500. 
B) decrease by exactly $500. 
C) decrease by more than $500. 
D) increase by an indeterminate amount.

Question 18

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A) Improvements in production technology reduce the costs of producing laptop computers. 
B) The number of firms selling laptop computers decreases. 
C) Consumers' income decreases, and laptop computers are a normal good. 
D) The number of consumers buying laptop computers decreases. 
A) Improvements in production technology reduce the costs of producing laptop computers. 
B) The number of firms selling laptop computers decreases. 
C) Consumers' income decreases, and laptop computers are a normal good. 
D) The number of consumers buying laptop computers decreases.

Question 19

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 20

Minimum-wage laws dictate the

Accepted Answer

A) average price employers must pay for labor. 
B) highest price employers may pay for labor. 
C) lowest price employers may pay for labor. 
D) the highest and lowest prices employers may pay for labor. 
A) average price employers must pay for labor. 
B) highest price employers may pay for labor. 
C) lowest price employers may pay for labor. 
D) the highest and lowest prices employers may pay for labor.

Exam 6: Supply, Demand, and Government Policies

When OPEC raised the price of crude oil in the 1970s, it caused the

Figure 6-2 -Refer to Figure 6-2. The price ceiling

Figure 6-24 -Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Table 6-5 -Refer to Table 6-5. Which of the following price ceilings would be binding in this market?

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

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

All buyers benefit from a binding price ceiling.

Figure 6-24 -Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

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

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Figure 6-23 -If a tax is levied on the buyers of dog food, then

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Minimum-wage laws dictate the

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

Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?