Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-17
   ​
-Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A) Binding price floor 
B) Binding price ceiling 
C) Tax on the good 
D) Nonbinding price control 
A) Binding price floor 
B) Binding price ceiling 
C) Tax on the good 
D) Nonbinding price control

Question 4

A price ceiling is

Accepted Answer

A) often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B) a legal maximum on the price at which a good can be sold. 
C) often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D) imposed to make sure everyone can earn a fair wage. 
A) often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B) a legal maximum on the price at which a good can be sold. 
C) often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D) imposed to make sure everyone can earn a fair wage.

Question 5

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 6

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-17
   ​
-Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 8

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo

Question 9

Suppose the equilibrium price of a stick of deodorant is $4, and the government imposes a price floor of $5 per stick. As a result of the price floor, the

Accepted Answer

A) demand curve for deodorant shifts to the left. 
B) supply curve for deodorant shifts to the right. 
C) quantity demanded of deodorant decreases, and the quantity of deodorant that firms want to supply increases. 
D) quantity supplied of deodorant stays the same. 
A) demand curve for deodorant shifts to the left. 
B) supply curve for deodorant shifts to the right. 
C) quantity demanded of deodorant decreases, and the quantity of deodorant that firms want to supply increases. 
D) quantity supplied of deodorant stays the same.

Question 10

Figure 6-21
   ​
-Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 11

Scenario 6-2
Suppose demand for a product is given by the equation
QS1U1P1D S1S1P0= 120 - 4P
and supply for the product is given by the equation
QS1U1P1S S1S1P0= 4P
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling will not be

Question 12

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Accepted Answer

A) True 
 B)False

Question 13

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 14

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 15

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 16

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 17

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Accepted Answer

A binding price ceil

Question 18

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

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

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Which of the following causes the price paid by buyers to be different than the price received by sellers?

A price ceiling is

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Will a binding price floor result in a shortage or a surplus in the market?

Suppose the equilibrium price of a stick of deodorant is $4, and the government imposes a price floor of $5 per stick. As a result of the price floor, the

Figure 6-21 ​ -Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

A tax of $1 on buyers always decreases the equilibrium price by $1.

A tax on buyers decreases demand.

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Price ceilings are typically imposed to benefit buyers.

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

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

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

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 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Figure 6-21 -Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?