Question 1

Under rent control, tenants can expect

Accepted Answer

A) lower rent and higher quality housing. 
B) lower rent and lower quality housing. 
C) higher rent and a shortage of rental housing. 
D) higher rent and a surplus of rental housing. 
A) lower rent and higher quality housing. 
B) lower rent and lower quality housing. 
C) higher rent and a shortage of rental housing. 
D) higher rent and a surplus of rental housing.

Question 2

Long lines

Accepted Answer

A) and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B) and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C) are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D) are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A) and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B) and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C) are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D) are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 3

Since a tax imposed on buyers of a product only affects demand, such a tax has no impact on sellers in that market.
​

Accepted Answer

A) True 
 B)False

Question 4

In a free, competitive market, what is the rationing mechanism?

Accepted Answer

A) seller bias 
B) buyer bias 
C) government law 
D) price 
A) seller bias 
B) buyer bias 
C) government law 
D) price

Question 5

The following table shows the demand and supply schedules in a particular market.   If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric

Question 6

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 7

Table 6-6  
-Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Accepted Answer

A price ceiling must be set be

Question 8

Figure 6-12  
-Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Accepted Answer

A) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973. 
A) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

Question 9

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 10

A minimum wage that is set below a market's equilibrium wage will

Accepted Answer

A) result in an excess demand for labor, that is, unemployment. 
B) result in an excess demand for labor, that is, a shortage of workers. 
C) result in an excess supply of labor, that is, unemployment. 
D) have no impact on employment. 
A) result in an excess demand for labor, that is, unemployment. 
B) result in an excess demand for labor, that is, a shortage of workers. 
C) result in an excess supply of labor, that is, unemployment. 
D) have no impact on employment.

Question 11

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-25  
-Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be

Accepted Answer

A) larger, and the burden on sellers will be smaller. 
B) smaller, and the burden on sellers will be larger. 
C) the same, and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information. 
A) larger, and the burden on sellers will be smaller. 
B) smaller, and the burden on sellers will be larger. 
C) the same, and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information.

Question 13

When a tax is levied on sellers of tea,

Accepted Answer

A) the well-being of both sellers and buyers of tea is unaffected. 
B) sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C) sellers of tea are made worse off, and buyers of tea are made better off. 
D) both sellers and buyers of tea are made worse off. 
A) the well-being of both sellers and buyers of tea is unaffected. 
B) sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C) sellers of tea are made worse off, and buyers of tea are made better off. 
D) both sellers and buyers of tea are made worse off.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-6  
-Refer to Figure 6-6. Which of the following statements is correct?

Accepted Answer

A) A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding. 
B) A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding. 
C) A price ceiling set at $9 would result in a surplus. 
D) A price floor set at $11 would result in a surplus. 
A) A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding. 
B) A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding. 
C) A price ceiling set at $9 would result in a surplus. 
D) A price floor set at $11 would result in a surplus.

Question 17

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A) One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B) One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C) One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D) Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers. 
A) One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B) One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C) One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D) Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

Question 18

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 19

One disadvantage of government subsidies over price controls is that subsidies

Accepted Answer

A) prevent the attainment of equilibrium in the markets in which they are imposed. 
B) make higher taxes necessary. 
C) are always unfair to those with low incomes. 
D) cause unemployment. 
A) prevent the attainment of equilibrium in the markets in which they are imposed. 
B) make higher taxes necessary. 
C) are always unfair to those with low incomes. 
D) cause unemployment.

Question 20

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

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

Under rent control, tenants can expect

Long lines

Since a tax imposed on buyers of a product only affects demand, such a tax has no impact on sellers in that market. ​

In a free, competitive market, what is the rationing mechanism?

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Figure 6-12 -Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

A minimum wage that is set below a market's equilibrium wage will

A tax of $1 on buyers always decreases the equilibrium price by $1.

When a tax is levied on sellers of tea,

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

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Figure 6-6 -Refer to Figure 6-6. Which of the following statements is correct?

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Price controls often hurt those they are trying to help.

One disadvantage of government subsidies over price controls is that subsidies

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

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

Since a tax imposed on buyers of a product only affects demand, such a tax has no impact on sellers in that market.