Question 1

Figure 6-14  
-Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

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

Question 2

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

Accepted Answer

A) D1, and the supply is S1. 
B) D2, and the supply is S1. 
C) D1, and the supply is S2. 
D) D2, and the supply is S2. 
A) D1, and the supply is S1. 
B) D2, and the supply is S1. 
C) D1, and the supply is S2. 
D) D2, and the supply is S2.

Question 4

Table 6-6  
-Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 5

To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply.
​

Accepted Answer

A) True 
 B)False

Question 6

If a tax is imposed on a market with inelastic demand and elastic supply, then

Accepted Answer

A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared. 
A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared.

Question 7

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A) demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B) demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C) supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D) supply curve will shift downward by $20, and the effective price received by sellers will increase by $20. 
A) demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B) demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C) supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D) supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

Question 8

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

Accepted Answer

A) the quantity of physicals demanded increases. 
B) there is shortage of physicals. 
C) the quantity of physicals supplied decreases. 
D) All of the above are correct. 
A) the quantity of physicals demanded increases. 
B) there is shortage of physicals. 
C) the quantity of physicals supplied decreases. 
D) All of the above are correct.

Question 9

A binding minimum wage creates unemployment.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-9  
-Refer to Figure 6-9. At which price would a price floor be binding?

Accepted Answer

A) $7 
B) $6 
C) $4 
D) $5 
A) $7 
B) $6 
C) $4 
D) $5

Question 11

If the government removes a binding price ceiling 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 12

If a tax is levied on the sellers of a product, then there will be a(n)

Accepted Answer

A) downward shift of the supply curve. 
B) upward shift of the supply curve. 
C) decrease in quantity supplied. 
D) increase in quantity supplied. 
A) downward shift of the supply curve. 
B) upward shift of the supply curve. 
C) decrease in quantity supplied. 
D) increase in quantity supplied.

Question 13

When a tax is placed on the sellers of energy drinks, the

Accepted Answer

A) sellers bear the entire burden of the tax. 
B) buyers bear the entire burden of the tax. 
C) burden of the tax will be always be equally divided between the buyers and the sellers. 
D) burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal. 
A) sellers bear the entire burden of the tax. 
B) buyers bear the entire burden of the tax. 
C) burden of the tax will be always be equally divided between the buyers and the sellers. 
D) burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Question 14

Figure 6-4  
-Refer to Figure 6-4. Which of the following statements is not correct?

Accepted Answer

A) When the price is $10, quantity supplied equals quantity demanded. 
B) When the price is $6, there is a surplus of 8 units. 
C) When the price is $12, there is a surplus of 4 units. 
D) When the price is $16, quantity supplied exceeds quantity demanded by 12 units. 
A) When the price is $10, quantity supplied equals quantity demanded. 
B) When the price is $6, there is a surplus of 8 units. 
C) When the price is $12, there is a surplus of 4 units. 
D) When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

Question 15

Policymakers use taxes

Accepted Answer

A) to raise revenue for public purposes but not to influence market outcomes. 
B) both to raise revenue for public purposes and to influence market outcomes. 
C) when they realize that price controls alone are insufficient to correct market inequities. 
D) only in those markets in which the burden of the tax falls clearly on the sellers. 
A) to raise revenue for public purposes but not to influence market outcomes. 
B) both to raise revenue for public purposes and to influence market outcomes. 
C) when they realize that price controls alone are insufficient to correct market inequities. 
D) only in those markets in which the burden of the tax falls clearly on the sellers.

Question 16

Which of the following is correct?

Accepted Answer

A) Workers determine the supply of labor, and firms determine the demand for labor. 
B) Workers determine the demand for labor, and firms determine the supply of labor. 
C) The labor market is a single market for all different types of workers. 
D) The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor. 
A) Workers determine the supply of labor, and firms determine the demand for labor. 
B) Workers determine the demand for labor, and firms determine the supply of labor. 
C) The labor market is a single market for all different types of workers. 
D) The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor.

Question 17

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

A) the demand for treadmills will increase. 
B) the supply of treadmills will decrease. 
C) a shortage of treadmills will develop. 
D) All of the above are correct. 
A) the demand for treadmills will increase. 
B) the supply of treadmills will decrease. 
C) a shortage of treadmills will develop. 
D) All of the above are correct.

Question 18

A price ceiling set below the equilibrium price causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that a tax is placed on books. If the buyers 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 20

Long lines and gasoline shortages during the 1970's can be attributed completely to the decision by OPEC to raise crude oil prices.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

A binding price floor causes quantity supplied to be less than quantity demanded.

Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply. ​

If a tax is imposed on a market with inelastic demand and elastic supply, then

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

A binding minimum wage creates unemployment.

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be binding?

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

If a tax is levied on the sellers of a product, then there will be a(n)

When a tax is placed on the sellers of energy drinks, the

Figure 6-4 -Refer to Figure 6-4. Which of the following statements is not correct?

Policymakers use taxes

Which of the following is correct?

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

A price ceiling set below the equilibrium price causes a shortage in the market.

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

Long lines and gasoline shortages during the 1970's can be attributed completely to the decision by OPEC to raise crude oil prices.

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

To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply.