Question 1

A tax imposed on the sellers of a good will

Accepted Answer

A) raise both the price buyers pay and the effective price sellers receive. 
B) raise the price buyers pay and lower the effective price sellers receive. 
C) lower the price buyers pay and raise the effective price sellers receive. 
D) lower both the price buyers pay and the effective price sellers receive. 
A) raise both the price buyers pay and the effective price sellers receive. 
B) raise the price buyers pay and lower the effective price sellers receive. 
C) lower the price buyers pay and raise the effective price sellers receive. 
D) lower both the price buyers pay and the effective price sellers receive.

Question 2

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 3

When a binding price floor is imposed on a market,

Accepted Answer

A) price no longer serves as a rationing device. 
B) the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. 
C) only some sellers benefit. 
D) All of the above are correct. 
A) price no longer serves as a rationing device. 
B) the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. 
C) only some sellers benefit. 
D) All of the above are correct.

Question 4

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

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

Question 5

A price ceiling set below the equilibrium price causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 6

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 9

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A) every seller in the market benefits. 
B) all buyers and sellers benefit. 
C) every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers. 
D) some sellers will not be able to sell any amount of the good. 
A) every seller in the market benefits. 
B) all buyers and sellers benefit. 
C) every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers. 
D) some sellers will not be able to sell any amount of the good.

Question 10

If the government removes a tax on a good, then the quantity of the good sold will

Accepted Answer

A) increase. 
B) decrease. 
C) not change. 
D) All of the above are possible. 
A) increase. 
B) decrease. 
C) not change. 
D) All of the above are possible.

Question 11

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Accepted Answer

A) the demand curve for textbooks shifts downward by $5. 
B) buyers of textbooks pay $5 more per textbook than they were paying before the tax. 
C) sellers of textbooks are unaffected by the tax. 
D) All of the above are correct. 
A) the demand curve for textbooks shifts downward by $5. 
B) buyers of textbooks pay $5 more per textbook than they were paying before the tax. 
C) sellers of textbooks are unaffected by the tax. 
D) All of the above are correct.

Question 12

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

Accepted Answer

A) demand is more inelastic than the supply. 
B) supply is more inelastic than the demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments. 
A) demand is more inelastic than the supply. 
B) supply is more inelastic than the demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments.

Question 13

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Accepted Answer

A) True 
 B)False

Question 14

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) supplied to exceed quantity demanded by 45 units. 
B) supplied to exceed quantity demanded by 85 units. 
C) demanded to exceed quantity supplied by 45 units. 
D) demanded to exceed quantity supplied by 85 units. 
A) supplied to exceed quantity demanded by 45 units. 
B) supplied to exceed quantity demanded by 85 units. 
C) demanded to exceed quantity supplied by 45 units. 
D) demanded to exceed quantity supplied by 85 units.

Question 16

Since a tax imposed on buyers of a product only affects demand, such a tax has no impact on sellers in that market.
​

Accepted Answer

A) True 
 B)False

Question 17

Over time, housing shortages caused by rent control

Accepted Answer

A) increase, because the demand for and supply of housing are less elastic in the long run. 
B) increase, because the demand for and supply of housing are more elastic in the long run. 
C) decrease, because the demand for and supply of housing are less elastic in the long run. 
D) decrease, because the demand for and supply of housing are more elastic in the long run. 
A) increase, because the demand for and supply of housing are less elastic in the long run. 
B) increase, because the demand for and supply of housing are more elastic in the long run. 
C) decrease, because the demand for and supply of housing are less elastic in the long run. 
D) decrease, because the demand for and supply of housing are more elastic in the long run.

Question 18

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

Accepted Answer

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

Question 19

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-5  
-Refer to Figure 6-5. If the solid horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A) binding and creates a surplus of 60 units of the good. 
B) binding and creates a surplus of 20 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding, and there will be no surplus or shortage of the good. 
A) binding and creates a surplus of 60 units of the good. 
B) binding and creates a surplus of 20 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding, and there will be no surplus or shortage of the good.

Exam 6: Supply, Demand, and Government Policies

A tax imposed on the sellers of a good will

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

When a binding price floor is imposed on a market,

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

A price ceiling set below the equilibrium price causes a shortage in the market.

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

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

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

When a binding price floor is imposed on a market to benefit sellers,

If the government removes a tax on a good, then the quantity of the good sold will

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

A price ceiling set below the equilibrium price is nonbinding.

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

Since a tax imposed on buyers of a product only affects demand, such a tax has no impact on sellers in that market. ​

Over time, housing shortages caused by rent control

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

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Figure 6-5 -Refer to Figure 6-5. If the solid horizontal line on the graph represents a price ceiling, then the price ceiling is

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

Since a tax imposed on buyers of a product only affects demand, such a tax has no impact on sellers in that market.