Question 1

Figure 6-1
Panel (a)
Panel (b)    
-Refer to Figure 6-1. The price ceiling shown in panel (a)

Accepted Answer

A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct. 
A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct.

Question 2

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 3

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 4

Table 6-6  
-Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $4 woul

Question 5

Table 6-1  
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Accepted Answer

A) 0 units 
B) 400 units 
C) 1200 units 
D) 1600 units 
A) 0 units 
B) 400 units 
C) 1200 units 
D) 1600 units

Question 6

The quantity sold in a market will increase if the government

Accepted Answer

A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) More than one of the above is correct. 
A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) More than one of the above is correct.

Question 7

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 9

Table 6-6  
-Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 10

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Accepted Answer

A) not change, and the price received by sellers will not change. 
B) not change, and the price received by sellers will decrease. 
C) decrease, and the price received by sellers will not change. 
D) decrease, and the price received by sellers will decrease. 
A) not change, and the price received by sellers will not change. 
B) not change, and the price received by sellers will decrease. 
C) decrease, and the price received by sellers will not change. 
D) decrease, and the price received by sellers will decrease.

Question 11

Figure 6-32  
-Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $80 wou

Question 12

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-7  
-Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

Accepted Answer

A) buyers' total expenditure on the good decreases by $20. 
B) the supply curve shifts to the left; quantity sold is now 30 units and the price is $8. 
C) the quantity of the good demanded decreases by 10 units. 
D) the price of the good continues to serve as the rationing mechanism. 
A) buyers' total expenditure on the good decreases by $20. 
B) the supply curve shifts to the left; quantity sold is now 30 units and the price is $8. 
C) the quantity of the good demanded decreases by 10 units. 
D) the price of the good continues to serve as the rationing mechanism.

Question 14

A tax on the buyers of cameras encourages

Accepted Answer

A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) sellers to supply a larger quantity at every price. 
D) Both a) and b) are correct. 
A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) sellers to supply a larger quantity at every price. 
D) Both a) and b) are correct.

Question 15

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 16

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

A) increase, and the quantity sold in the market will increase. 
B) increase, and the quantity sold in the market will decrease. 
C) decrease, and the quantity sold in the market will increase. 
D) decrease, and the quantity sold in the market will decrease. 
A) increase, and the quantity sold in the market will increase. 
B) increase, and the quantity sold in the market will decrease. 
C) decrease, and the quantity sold in the market will increase. 
D) decrease, and the quantity sold in the market will decrease.

Question 17

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Accepted Answer

A) True 
 B)False

Question 18

The goal of rent control is to help the poor by making housing more affordable.

Accepted Answer

A) True 
 B)False

Question 19

The tax burden will fall most heavily on buyers of the good when the demand curve

Accepted Answer

A) is relatively steep, and the supply curve is relatively flat. 
B) is relatively flat, and the supply curve is relatively steep. 
C) and the supply curve are both relatively flat. 
D) and the supply curve are both relatively steep. 
A) is relatively steep, and the supply curve is relatively flat. 
B) is relatively flat, and the supply curve is relatively steep. 
C) and the supply curve are both relatively flat. 
D) and the supply curve are both relatively steep.

Question 20

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A) both taxes would fall more heavily on the buyers than on the sellers. 
B) the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C) the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D) both taxes would fall more heavily on the sellers than on the buyers. 
A) both taxes would fall more heavily on the buyers than on the sellers. 
B) the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C) the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D) both taxes would fall more heavily on the sellers than on the buyers.

Exam 6: Supply, Demand, and Government Policies

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. The price ceiling shown in panel (a)

A tax on buyers shifts the demand curve to the right.

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

The quantity sold in a market will increase if the government

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

A tax on the buyers of cameras encourages

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

The goal of rent control is to help the poor by making housing more affordable.

The tax burden will fall most heavily on buyers of the good when the demand curve

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

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