Question 1

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

Accepted Answer

A) floor. 
B) subsidy. 
C) support. 
D) ceiling. 
A) floor. 
B) subsidy. 
C) support. 
D) ceiling.

Question 2

A price ceiling set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 3

A $5 tax levied on the buyers of pants will cause the

Accepted Answer

A) supply curve for pants to shift down by $5. 
B) supply curve for pants to shift up by $5. 
C) demand curve for pants to shift down by $5. 
D) demand curve for pants to shift up by $5. 
A) supply curve for pants to shift down by $5. 
B) supply curve for pants to shift up by $5. 
C) demand curve for pants to shift down by $5. 
D) demand curve for pants to shift up by $5.

Question 4

When a binding price ceiling is imposed on a market,

Accepted Answer

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

Question 5

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 6

When a tax is levied on sellers of tea,

Accepted Answer

A) the well-being of both sellers and buyers of tea is unaffected. 
B) sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C) sellers of tea are made worse off, and buyers of tea are made better off. 
D) both sellers and buyers of tea are made worse off. 
A) the well-being of both sellers and buyers of tea is unaffected. 
B) sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C) sellers of tea are made worse off, and buyers of tea are made better off. 
D) both sellers and buyers of tea are made worse off.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

If the demand curve is more price elastic than the supply curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Accepted Answer

The sellers will bea

Question 9

Figure 6-25  
-Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be

Accepted Answer

A) larger, and the burden on sellers will be smaller. 
B) smaller, and the burden on sellers will be larger. 
C) the same, and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information. 
A) larger, and the burden on sellers will be smaller. 
B) smaller, and the burden on sellers will be larger. 
C) the same, and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information.

Question 10

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 11

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Accepted Answer

A) True 
 B)False

Question 12

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 13

​Price ceilings are never binding when set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

A $0.10 tax levied on the sellers of chocolate bars will cause the

Accepted Answer

A) supply curve for chocolate bars to shift down by $0.10. 
B) supply curve for chocolate bars to shift up by $0.10. 
C) demand curve for chocolate bars to shift down by $0.10. 
D) demand curve for chocolate bars to shift up by $0.10. 
A) supply curve for chocolate bars to shift down by $0.10. 
B) supply curve for chocolate bars to shift up by $0.10. 
C) demand curve for chocolate bars to shift down by $0.10. 
D) demand curve for chocolate bars to shift up by $0.10.

Question 16

Figure 6-30
Panel (a)
Panel (b)     Panel (c)  
-Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Accepted Answer

A) the market shown in panel (a). 
B) the market shown in panel (b). 
C) the market shown in panel (c). 
D) All of the above are correct. 
A) the market shown in panel (a). 
B) the market shown in panel (b). 
C) the market shown in panel (c). 
D) All of the above are correct.

Question 17

Figure 6-9  
-Refer to Figure 6-9. A price floor set at

Accepted Answer

A) $4 will be binding and will result in a shortage of 8 units. 
B) $4 will be binding and will result in a shortage of 16 units. 
C) $7 will be binding and will result in a surplus of 4 units. 
D) $7 will be binding and will result in a surplus of 8 units. 
A) $4 will be binding and will result in a shortage of 8 units. 
B) $4 will be binding and will result in a shortage of 16 units. 
C) $7 will be binding and will result in a surplus of 4 units. 
D) $7 will be binding and will result in a surplus of 8 units.

Question 18

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 19

A price ceiling 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 20

Which of the following causes a surplus of a good?

Accepted Answer

A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) More than one of the above is correct. 
A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) More than one of the above is correct.

Exam 6: Supply, Demand, and Government Policies

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

A price ceiling set below the equilibrium price is binding.

A $5 tax levied on the buyers of pants will cause the

When a binding price ceiling is imposed on a market,

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

When a tax is levied on sellers of tea,

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

If the demand curve is more price elastic than the supply curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

A binding minimum wage creates a surplus of labor.

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Price ceilings are typically imposed to benefit buyers.

​Price ceilings are never binding when set above the equilibrium price.

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

A $0.10 tax levied on the sellers of chocolate bars will cause the

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Figure 6-9 -Refer to Figure 6-9. A price floor set at

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

A price ceiling will be binding only if it is set

Which of the following causes a surplus of a good?

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 supply.

Price ceilings are never binding when set above the equilibrium price.