Question 1

Minimum-wage laws dictate

Accepted Answer

A) the exact wage that firms must pay workers. 
B) only a maximum wage that firms may pay workers. 
C) only a minimum wage that firms may pay workers. 
D) both a minimum wage and a maximum wage that firms may pay workers. 
A) the exact wage that firms must pay workers. 
B) only a maximum wage that firms may pay workers. 
C) only a minimum wage that firms may pay workers. 
D) both a minimum wage and a maximum wage that firms may pay workers.

Question 2

Figure 6-14
   ​
-Refer to Figure 6-14. Suppose D1 represents the demand curve for paperback novels, D2 represents the demand curve for gasoline, and S1 is representative of the supply curve for paperback novels as well as the supply curve for gasoline. After the imposition of the $2 tax on paperback novels and on gasoline, the

Accepted Answer

A) buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels. 
B) sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels. 
C) buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels. 
D) buyers of gasoline bear a lower burden of the $2 tax than buyers of paperback novels. 
A) buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels. 
B) sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels. 
C) buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels. 
D) buyers of gasoline bear a lower burden of the $2 tax than buyers of paperback novels.

Question 3

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 4

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 5

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 6

Most labor economists believe that the supply of labor is much more elastic than the demand.

Accepted Answer

A) True 
 B)False

Question 7

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 8

If a price floor is not binding, then

Accepted Answer

A) the equilibrium price is above the price floor. 
B) the equilibrium price is below the price floor. 
C) there will be a surplus in the market. 
D) there will be a shortage in the market. 
A) the equilibrium price is above the price floor. 
B) the equilibrium price is below the price floor. 
C) there will be a surplus in the market. 
D) there will be a shortage in the market.

Question 9

The impact of the minimum wage depends on the skill and experience of the worker.

Accepted Answer

A) True 
 B)False

Question 10

Consider the market for gasoline. Buyers

Accepted Answer

A) and sellers would lobby for a price ceiling. 
B) and sellers would lobby for a price floor. 
C) would lobby for a price ceiling, whereas sellers would lobby for a price floor. 
D) would lobby for a price floor, whereas sellers would lobby for a price ceiling. 
A) and sellers would lobby for a price ceiling. 
B) and sellers would lobby for a price floor. 
C) would lobby for a price ceiling, whereas sellers would lobby for a price floor. 
D) would lobby for a price floor, whereas sellers would lobby for a price ceiling.

Question 11

Suppose buyers of protein shakes are required to send $1.40 to the government for every protein shake they buy. Further, suppose this tax causes the effective price received by sellers of protein shakes to fall by $0.70 per protein shake. Which of the following statements is correct?

Accepted Answer

A) This tax causes the supply curve for protein shakes to shift downward by $1.40 at each quantity. 
B) The price paid by buyers is $0.70 per shake more than it was before the tax. 
C) Forty percent of the burden of the tax falls on buyers. 
D) This tax causes the demand curve for protein shakes to shift downward by $1.40 at each quantity. 
A) This tax causes the supply curve for protein shakes to shift downward by $1.40 at each quantity. 
B) The price paid by buyers is $0.70 per shake more than it was before the tax. 
C) Forty percent of the burden of the tax falls on buyers. 
D) This tax causes the demand curve for protein shakes to shift downward by $1.40 at each quantity.

Question 12

Figure 6-19
   ​
-Refer to Figure 6-19. If the government set a price floor at $70, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 13

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A) results in a surplus. 
B) is set below the equilibrium price. 
C) causes quantity supplied to exceed quantity demanded. 
D) is set above the equilibrium price. 
A) results in a surplus. 
B) is set below the equilibrium price. 
C) causes quantity supplied to exceed quantity demanded. 
D) is set above the equilibrium price.

Question 14

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 15

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

A) only the buyers of gasoline. 
B) only the sellers of gasoline. 
C) either buyers or sellers of gasoline. 
D) whichever side of the market is less elastic. 
A) only the buyers of gasoline. 
B) only the sellers of gasoline. 
C) either buyers or sellers of gasoline. 
D) whichever side of the market is less elastic.

Question 16

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 17

If the demand curve is more price elastic than the supply curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Accepted Answer

When the demand curve is more elastic th

Question 18

Figure 6-3
  
-Refer to Figure 6-3. A government-imposed price of $6 in this market is an example of a

Accepted Answer

A) binding price ceiling that creates a shortage. 
B) nonbinding price ceiling that creates a shortage 
C) binding price floor that creates a surplus. 
D) nonbinding price floor that creates a surplus. 
A) binding price ceiling that creates a shortage. 
B) nonbinding price ceiling that creates a shortage 
C) binding price floor that creates a surplus. 
D) nonbinding price floor that creates a surplus.

Question 19

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Accepted Answer

A) demand curve for physicals shifts to the right. 
B) supply curve for physicals shifts to the left. 
C) quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D) number of physicals performed stays the same. 
A) demand curve for physicals shifts to the right. 
B) supply curve for physicals shifts to the left. 
C) quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D) number of physicals performed stays the same.

Question 20

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Minimum-wage laws dictate

Most economists are in favor of price controls as a way of allocating resources in the economy.

All buyers benefit from a binding price ceiling.

A binding price ceiling causes a shortage in the market.

Most labor economists believe that the supply of labor is much more elastic than the demand.

The rationing mechanisms that develop under binding price floors are usually efficient.

If a price floor is not binding, then

The impact of the minimum wage depends on the skill and experience of the worker.

Consider the market for gasoline. Buyers

Suppose buyers of protein shakes are required to send $1.40 to the government for every protein shake they buy. Further, suppose this tax causes the effective price received by sellers of protein shakes to fall by $0.70 per protein shake. Which of the following statements is correct?

Figure 6-19 ​ -Refer to Figure 6-19. If the government set a price floor at $70, would there be a shortage or surplus, and how large would be the shortage/surplus?

To say that a price ceiling is binding is to say that the price ceiling

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?

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

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

If the demand curve is more price elastic than the supply curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Figure 6-3 -Refer to Figure 6-3. A government-imposed price of $6 in this market is an example of a

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Workers, rather than firms, bear most of the burden of the payroll tax.

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 Nations 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

Figure 6-19 -Refer to Figure 6-19. If the government set a price floor at $70, would there be a shortage or surplus, and how large would be the shortage/surplus?