Question 1

If a price floor is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 2

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 3

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo

Question 4

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price floor at $10, 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 5

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A) frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B) enhanced maintenance programs to promote the high quality of the cars 
C) free gasoline given to people as an incentive to a rent a car 
D) slow replacement of old rental cars with newer ones 
A) frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B) enhanced maintenance programs to promote the high quality of the cars 
C) free gasoline given to people as an incentive to a rent a car 
D) slow replacement of old rental cars with newer ones

Question 6

The quantity sold in a market will decrease if the government decreases a

Accepted Answer

A) binding price floor in that market. 
B) binding price ceiling in that market. 
C) tax on the good sold in that market. 
D) All of the above are correct. 
A) binding price floor in that market. 
B) binding price ceiling in that market. 
C) tax on the good sold in that market. 
D) All of the above are correct.

Question 7

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-7  
-Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

Accepted Answer

A) any price below $7. 
B) any price below $3. 
C) any price below $9. 
D) any price above $7. 
A) any price below $7. 
B) any price below $3. 
C) any price below $9. 
D) any price above $7.

Question 9

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

Accepted Answer

A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment. 
A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment.

Question 10

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 11

Table 6-2  
-Refer to Table 6-2. A price floor set at $20 will

Accepted Answer

A) be binding and will result in a surplus of 75 units. 
B) be binding and will result in a surplus of 125 units. 
C) be binding and will result in a surplus of 200 units. 
D) not be binding. 
A) be binding and will result in a surplus of 75 units. 
B) be binding and will result in a surplus of 125 units. 
C) be binding and will result in a surplus of 200 units. 
D) not be binding.

Question 12

A shortage results when a

Accepted Answer

A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market. 
A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market.

Question 13

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, the

Accepted Answer

A) demand curve for physicals shifts to the right. 
B) supply curve for physicals shifts to the left. 
C) quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D) number of physicals performed stays the same. 
A) demand curve for physicals shifts to the right. 
B) supply curve for physicals shifts to the left. 
C) quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D) number of physicals performed stays the same.

Question 14

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

Accepted Answer

A) $8 
B) $5 
C) $6 
D) $7 
A) $8 
B) $5 
C) $6 
D) $7

Question 15

A key lesson from the payroll tax is that the

Accepted Answer

A) tax is a tax solely on workers. 
B) tax is a tax solely on firms that hire workers. 
C) tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive. 
D) true burden of a tax cannot be legislated. 
A) tax is a tax solely on workers. 
B) tax is a tax solely on firms that hire workers. 
C) tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive. 
D) true burden of a tax cannot be legislated.

Question 16

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 17

The minimum wage is more often binding for teenagers than for other members of the labor force.

Accepted Answer

A) True 
 B)False

Question 18

A tax on sellers will shift the

Accepted Answer

A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax. 
A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax.

Question 19

Table 6-1  
-Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

Accepted Answer

A) 0 units 
B) 200 units 
C) 1800 units 
D) 2000 units 
A) 0 units 
B) 200 units 
C) 1800 units 
D) 2000 units

Question 20

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

If a price floor is not binding, then it will have no effect on the market.

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Will a binding price floor result in a shortage or a surplus in the market?

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

The quantity sold in a market will decrease if the government decreases a

A tax on buyers increases the size of a market.

Figure 6-7 -Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Table 6-2 -Refer to Table 6-2. A price floor set at $20 will

A shortage results when a

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, the

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

A key lesson from the payroll tax is that the

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

The minimum wage is more often binding for teenagers than for other members of the labor force.

A tax on sellers will shift the

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

Workers, rather than firms, bear most of the burden of the payroll tax.

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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