Question 1

Figure 6-2  
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A) causes a shortage of 40 units. 
B) is not binding, because it is set above the equilibrium price. 
C) causes a shortage of 45 units. 
D) causes a shortage of 85 units. 
A) causes a shortage of 40 units. 
B) is not binding, because it is set above the equilibrium price. 
C) causes a shortage of 45 units. 
D) causes a shortage of 85 units.

Question 2

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Accepted Answer

A) $8. 
B) $10. 
C) $16. 
D) $24. 
A) $8. 
B) $10. 
C) $16. 
D) $24.

Question 3

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $16 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

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 5

Table 6-2  
-Refer to Table 6-2. A price floor set at $5 will

Accepted Answer

A) be binding and will result in a surplus of 50 units. 
B) be binding and will result in a surplus of 250 units. 
C) be binding and will result in a surplus of 300 units. 
D) not be binding. 
A) be binding and will result in a surplus of 50 units. 
B) be binding and will result in a surplus of 250 units. 
C) be binding and will result in a surplus of 300 units. 
D) not be binding.

Question 6

When a tax is imposed on the sellers of a good, the supply curve shifts

Accepted Answer

A) upward by the amount of the tax. 
B) downward by the amount of the tax. 
C) upward by less than the amount of the tax. 
D) downward by less than the amount of the tax. 
A) upward by the amount of the tax. 
B) downward by the amount of the tax. 
C) upward by less than the amount of the tax. 
D) downward by less than the amount of the tax.

Question 7

The distribution of the burden of a tax depends strictly on the elasticity of demand.
​

Accepted Answer

A) True 
 B)False

Question 8

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.  
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A) $2. 
B) $3. 
C) $4. 
D) $5. 
A) $2. 
B) $3. 
C) $4. 
D) $5.

Question 9

If a binding price floor is imposed on the market for eBooks, then

Accepted Answer

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

Question 10

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 11

Table 6-1  
-Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

Accepted Answer

A) 0 units 
B) 400 units 
C) 600 units 
D) 1000 units 
A) 0 units 
B) 400 units 
C) 600 units 
D) 1000 units

Question 12

The minimum wage does not apply to

Accepted Answer

A) jobs for teenagers. 
B) jobs for members of minority groups. 
C) unpaid internships. 
D) jobs that include on-the-job training. 
A) jobs for teenagers. 
B) jobs for members of minority groups. 
C) unpaid internships. 
D) jobs that include on-the-job training.

Question 13

A price floor will be binding only if it is set

Accepted Answer

A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price. 
A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price.

Question 14

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on sellers is

Accepted Answer

A) $1 per unit. 
B) $1.50 per unit. 
C) $2 per unit. 
D) $3 per unit. 
A) $1 per unit. 
B) $1.50 per unit. 
C) $2 per unit. 
D) $3 per unit.

Question 15

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A) no buyers actually benefit. 
B) some buyers benefit, but no buyers are harmed. 
C) some buyers benefit, and some buyers are harmed. 
D) all buyers benefit. 
A) no buyers actually benefit. 
B) some buyers benefit, but no buyers are harmed. 
C) some buyers benefit, and some buyers are harmed. 
D) all buyers benefit.

Question 16

Figure 6-22  
-Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

Accepted Answer

A) $2.00. 
B) $3.50. 
C) $5.00. 
D) $3.00. 
A) $2.00. 
B) $3.50. 
C) $5.00. 
D) $3.00.

Question 17

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Accepted Answer

A) ​a government study that shows that consuming chocolate increases the incidence of cancer. 
B) ​a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate. 
C) ​South American cocoa bean producers refuse to ship to chocolate producers in the US. 
D) ​a sharp drop in consumer income; chocolate is a normal good. 
A) ​a government study that shows that consuming chocolate increases the incidence of cancer. 
B) ​a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate. 
C) ​South American cocoa bean producers refuse to ship to chocolate producers in the US. 
D) ​a sharp drop in consumer income; chocolate is a normal good.

Question 18

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A) OPEC raised the price of crude oil in world markets. 
B) U.S. gasoline producers raised the price of gasoline. 
C) the U.S. government maintained a price ceiling on gasoline. 
D) Americans typically commuted long distances. 
A) OPEC raised the price of crude oil in world markets. 
B) U.S. gasoline producers raised the price of gasoline. 
C) the U.S. government maintained a price ceiling on gasoline. 
D) Americans typically commuted long distances.

Question 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-2 -Refer to Figure 6-2. The price ceiling

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 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 minimum wage that is set below a market's equilibrium wage will

Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

When a tax is imposed on the sellers of a good, the supply curve shifts

The distribution of the burden of a tax depends strictly on the elasticity of demand. ​

If a binding price floor is imposed on the market for eBooks, then

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

The minimum wage does not apply to

A price floor will be binding only if it is set

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

When a binding price ceiling is imposed on a market to benefit buyers,

Figure 6-22 -Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

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

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

Filters

The distribution of the burden of a tax depends strictly on the elasticity of demand.

Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?