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

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 ceilings would be binding in this market?

Accepted Answer

A) $4 
B) $5 
C) $6 
D) $7 
A) $4 
B) $5 
C) $6 
D) $7

Question 3

The minimum wage

Accepted Answer

A) is an example of a price ceiling. 
B) has its greatest impact on middle-aged and immigrant workers. 
C) does not apply to unpaid internships. 
D) does not affect the quantity of labor demanded; it only affects the quantity of labor supplied. 
A) is an example of a price ceiling. 
B) has its greatest impact on middle-aged and immigrant workers. 
C) does not apply to unpaid internships. 
D) does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.

Question 4

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

Accepted Answer

A) most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B) most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C) the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D) a large percentage of smokers to quit smoking in response to the tax. 
A) most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B) most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C) the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D) a large percentage of smokers to quit smoking in response to the tax.

Question 5

Figure 6-11  
-Refer to Figure 6-11. Which of the following statements is not correct?

Accepted Answer

A) A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. 
B) A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. 
C) A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. 
D) A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B. 
A) A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. 
B) A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. 
C) A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. 
D) A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B.

Question 6

A tax imposed on the buyers of a good will raise the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Question 7

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

A) price subsidy. 
B) price floor. 
C) tax. 
D) price ceiling. 
A) price subsidy. 
B) price floor. 
C) tax. 
D) price ceiling.

Question 8

Figure 6-32  
-Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul

Question 9

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Accepted Answer

A) raise revenue from the wealthy. 
B) prevent wealthy people from buying luxuries. 
C) force producers of luxury goods to reduce employment. 
D) limit exports of luxury goods to other countries. 
A) raise revenue from the wealthy. 
B) prevent wealthy people from buying luxuries. 
C) force producers of luxury goods to reduce employment. 
D) limit exports of luxury goods to other countries.

Question 10

The presence of a price control in a market for a good or service usually is an indication that

Accepted Answer

A) an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B) the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C) policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D) policymakers correctly believed that price controls would generate no inequities of their own once imposed. 
A) an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B) the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C) policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D) policymakers correctly believed that price controls would generate no inequities of their own once imposed.

Question 11

Which of the following is correct? Price controls

Accepted Answer

A) always help those they are designed to help. 
B) never help those they are designed to help. 
C) often hurt those they are designed to help. 
D) always hurt those they are designed to help. 
A) always help those they are designed to help. 
B) never help those they are designed to help. 
C) often hurt those they are designed to help. 
D) always hurt those they are designed to help.

Question 12

Figure 6-21  
-Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Accepted Answer

A) $8.00 
B) $9.00 
C) $10.50 
D) $12.00 
A) $8.00 
B) $9.00 
C) $10.50 
D) $12.00

Question 13

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar. 
A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar.

Question 14

​Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to

Accepted Answer

A) ​shift the supply curve up by exactly $4 and the price paid by buyers will remain unchanged. 
B) ​shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4. 
C) ​shift the supply curve up by exactly $4 and the price received by sellers will rise by exactly $4. 
D) ​shift the demand curve down by exactly $4 and the price paid by buyers will fall by exactly $4. 
A) ​shift the supply curve up by exactly $4 and the price paid by buyers will remain unchanged. 
B) ​shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4. 
C) ​shift the supply curve up by exactly $4 and the price received by sellers will rise by exactly $4. 
D) ​shift the demand curve down by exactly $4 and the price paid by buyers will fall by exactly $4.

Question 15

Define a price floor.

Accepted Answer

A price floor is a l

Question 16

Rent control

Accepted Answer

A) serves as an example of how a social problem can be alleviated or even solved by government policies. 
B) serves as an example of a price ceiling. 
C) is regarded by most economists as an efficient way of helping the poor. 
D) is the most efficient way to allocate scarce housing resources. 
A) serves as an example of how a social problem can be alleviated or even solved by government policies. 
B) serves as an example of a price ceiling. 
C) is regarded by most economists as an efficient way of helping the poor. 
D) is the most efficient way to allocate scarce housing resources.

Question 17

​The incidence of a tax is

Accepted Answer

A) ​always determined by the demand side of the market. 
B) ​always determined by the supply side of the market. 
C) ​always determined by the interaction of the demand and supply side of the market.. 
D) ​always determined by which side of the market the government imposes the tax on. 
A) ​always determined by the demand side of the market. 
B) ​always determined by the supply side of the market. 
C) ​always determined by the interaction of the demand and supply side of the market.. 
D) ​always determined by which side of the market the government imposes the tax on.

Question 18

Buyers and sellers always share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 19

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A) a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B) the government's policy of maintaining a price ceiling on gasoline. 
C) an indifference among U.S. consumers toward conservation. 
D) the lack of substitutes for crude oil. 
A) a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B) the government's policy of maintaining a price ceiling on gasoline. 
C) an indifference among U.S. consumers toward conservation. 
D) the lack of substitutes for crude oil.

Question 20

Figure 6-3
Panel (a)
Panel (b)    
-Refer to Figure 6-3. In panel (b), there will be

Accepted Answer

A) a shortage. 
B) equilibrium in the market. 
C) a surplus. 
D) lines of people waiting to buy the good. 
A) a shortage. 
B) equilibrium in the market. 
C) a surplus. 
D) lines of people waiting to buy the good.

Exam 6: Supply, Demand, and Government Policies

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

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 ceilings would be binding in this market?

The minimum wage

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

Figure 6-11 -Refer to Figure 6-11. Which of the following statements is not correct?

A tax imposed on the buyers of a good will raise the

A legal minimum on the price at which a good can be sold is called a

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

The presence of a price control in a market for a good or service usually is an indication that

Which of the following is correct? Price controls

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

​Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to

Define a price floor.

Rent control

​The incidence of a tax is

Buyers and sellers always share the burden of a tax equally.

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. In panel (b), there will be

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

Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to

The incidence of a tax is