Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Table 6-1  
-Refer to Table 6-1. Which of the following price floors would be binding in this market?

Accepted Answer

A) $70 
B) $60 
C) $50 
D) $40 
A) $70 
B) $60 
C) $50 
D) $40

Question 3

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 4

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

Accepted Answer

A) unemployment compensation. 
B) the salaries of members of Congress. 
C) Social Security and Medicare. 
D) housing subsidies for low-income people. 
A) unemployment compensation. 
B) the salaries of members of Congress. 
C) Social Security and Medicare. 
D) housing subsidies for low-income people.

Question 5

To say that a price floor is binding is to say that the price floor

Accepted Answer

A) results in a shortage. 
B) is set below the equilibrium price. 
C) causes quantity supplied to exceed quantity demanded. 
D) All of the above are correct. 
A) results in a shortage. 
B) is set below the equilibrium price. 
C) causes quantity supplied to exceed quantity demanded. 
D) All of the above are correct.

Question 6

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 7

If the government removes a binding price floor 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 8

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 9

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 10

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 11

A tax burden falls more heavily on the side of the market that

Accepted Answer

A) has a fewer number of participants. 
B) is more inelastic. 
C) is closer to unit elastic. 
D) is less inelastic. 
A) has a fewer number of participants. 
B) is more inelastic. 
C) is closer to unit elastic. 
D) is less inelastic.

Question 12

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14 
A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14

Question 14

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 15

When a tax is placed on the buyers of a product, the

Accepted Answer

A) size of the market decreases. 
B) effective price received by sellers decreases, and the price paid by buyers increases. 
C) demand for the product decreases. 
D) All of the above are correct. 
A) size of the market decreases. 
B) effective price received by sellers decreases, and the price paid by buyers increases. 
C) demand for the product decreases. 
D) All of the above are correct.

Question 16

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 17

If a tax is levied on the buyers of a product, then the demand curve will

Accepted Answer

A) not shift. 
B) shift down. 
C) shift up. 
D) become flatter. 
A) not shift. 
B) shift down. 
C) shift up. 
D) become flatter.

Question 18

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following price floors would be binding in this market?

Accepted Answer

A) $3 
B) $4 
C) $5 
D) $6 
A) $3 
B) $4 
C) $5 
D) $6

Question 19

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

Accepted Answer

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

Question 20

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus. 
A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus.

Exam 6: Supply, Demand, and Government Policies

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

Table 6-1 -Refer to Table 6-1. Which of the following price floors would be binding in this market?

Rent-control laws dictate a minimum rent that landlords may charge tenants.

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

To say that a price floor is binding is to say that the price floor

The effects of rent control in the long run include lower rents and lower-quality housing.

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

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?

Price controls can generate inequities.

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.

A tax burden falls more heavily on the side of the market that

A price ceiling set above the equilibrium price causes a surplus in the market.

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

When a tax is placed on the buyers of a product, the

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

If a tax is levied on the buyers of a product, then the demand curve will

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following price floors would be binding in this market?

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

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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