Question 1

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A) an enhancement of efficiency. 
B) undesirable rationing mechanisms. 
C) a surplus. 
D) a shortage. 
A) an enhancement of efficiency. 
B) undesirable rationing mechanisms. 
C) a surplus. 
D) a shortage.

Question 2

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i)
Binding price ceiling.
(ii)
Non-binding price ceiling.
(iii)
Binding price floor.
(iv)
Non-binding price floor.

Accepted Answer

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

Question 4

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 5

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

A) decrease, and the quantity sold in the market will decrease. 
B) decrease, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) increase, and the quantity sold in the market will increase. 
A) decrease, and the quantity sold in the market will decrease. 
B) decrease, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) increase, and the quantity sold in the market will increase.

Question 6

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A) U.S. government regulations pertaining to the price of gasoline. 
B) the Organization of Petroleum Exporting Countries (OPE
C) . 
C) major oil companies operating in the U.S. 
D) consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full. 
A) U.S. government regulations pertaining to the price of gasoline. 
B) the Organization of Petroleum Exporting Countries (OPE
C) . 
C) major oil companies operating in the U.S. 
D) consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.

Question 7

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

Accepted Answer

A) A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding. 
B) A price floor set at $14 would be binding, but a price floor 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 $6 would result in a shortage. 
A) A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding. 
B) A price floor set at $14 would be binding, but a price floor 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 $6 would result in a shortage.

Question 8

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Initially, is this price floor binding? Suppose that for some reason demand were to decrease to   Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of the resulting shortage/surplus?

Accepted Answer

Initially the price floor is not binding

Question 9

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 10

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 11

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Accepted Answer

A binding price ceil

Question 12

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Accepted Answer

A) increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. 
B) increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee. 
C) decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. 
D) decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee. 
A) increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. 
B) increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee. 
C) decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. 
D) decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

Question 13

If a tax is imposed on a market with inelastic supply and elastic demand, 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 14

Figure 6-24  
-Refer to Figure 6-24. In the after-tax equilibrium, government collects

Accepted Answer

A) $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B) $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C) $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D) $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers. 
A) $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B) $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C) $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D) $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers.

Question 15

Figure 6-8  
-Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Accepted Answer

A) no shortage of the good. 
B) a shortage of 10 units of the good. 
C) a shortage of 20 units of the good. 
D) a shortage of 30 units of the good. 
A) no shortage of the good. 
B) a shortage of 10 units of the good. 
C) a shortage of 20 units of the good. 
D) a shortage of 30 units of the good.

Question 16

Figure 6-8  
-Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Accepted Answer

A) no surplus of the good. 
B) a surplus of 5 units of the good. 
C) a surplus of 10 units of the good. 
D) a surplus of 15 units of the good. 
A) no surplus of the good. 
B) a surplus of 5 units of the good. 
C) a surplus of 10 units of the good. 
D) a surplus of 15 units of the good.

Question 17

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 18

A $5 tax levied on the buyers of pants will cause the

Accepted Answer

A) supply curve for pants to shift down by $5. 
B) supply curve for pants to shift up by $5. 
C) demand curve for pants to shift down by $5. 
D) demand curve for pants to shift up by $5. 
A) supply curve for pants to shift down by $5. 
B) supply curve for pants to shift up by $5. 
C) demand curve for pants to shift down by $5. 
D) demand curve for pants to shift up by $5.

Question 19

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 20

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

An outcome that can result from either a price ceiling or a price floor is

The primary effect of rent control in the short run is to reduce rents.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) Binding price ceiling. (ii) Non-binding price ceiling. (iii) Binding price floor. (iv) Non-binding price floor.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

If the government removes a binding price ceiling from a market, then the price received by sellers will

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

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

A tax on buyers decreases demand.

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

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

Figure 6-24 -Refer to Figure 6-24. In the after-tax equilibrium, government collects

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

A $5 tax levied on the buyers of pants will cause the

Price floors are typically imposed to benefit sellers.

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

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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