Question 1

Which of the following is not a result of rent control?

Accepted Answer

A) Fewer new apartments offered for rent 
B) Less maintenance provided by landlords 
C) Bribery 
D) Higher quality housing 
A) Fewer new apartments offered for rent 
B) Less maintenance provided by landlords 
C) Bribery 
D) Higher quality housing

Question 2

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A) OPEC raised the price of crude oil in world markets. 
B) U.S.gasoline producers raised the price of gasoline. 
C) the U.S.government maintained a price ceiling on gasoline. 
D) Americans typically commuted long distances. 
A) OPEC raised the price of crude oil in world markets. 
B) U.S.gasoline producers raised the price of gasoline. 
C) the U.S.government maintained a price ceiling on gasoline. 
D) Americans typically commuted long distances.

Question 3

Figure 6-7
  
-Refer to Figure 6-7. If the government imposes a price ceiling at $9, it would be

Accepted Answer

A) binding if market demand is Demand A or Demand B. 
B) nonbinding if market demand is Demand A or Demand B. 
C) binding if market demand is Demand A and nonbinding if market demand is Demand B. 
D) nonbinding if market demand is Demand A and binding if market demand is Demand B. 
A) binding if market demand is Demand A or Demand B. 
B) nonbinding if market demand is Demand A or Demand B. 
C) binding if market demand is Demand A and nonbinding if market demand is Demand B. 
D) nonbinding if market demand is Demand A and binding if market demand is Demand B.

Question 4

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 5

Figure 6-16
​
   ​
-Refer to Figure 6-16. A price floor set at $40 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 6

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 floor at $13 for this product. Is this price floor binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price floor will not be bi

Question 7

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Accepted Answer

A) shift the supply curve upward by less than 50 cents. 
B) raise the equilibrium price by 50 cents. 
C) create a 50-cent tax burden each for buyers and sellers. 
D) discourage market activity. 
A) shift the supply curve upward by less than 50 cents. 
B) raise the equilibrium price by 50 cents. 
C) create a 50-cent tax burden each for buyers and sellers. 
D) discourage market activity.

Question 8

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

Accepted Answer

A) True 
 B)False

Question 9

Table 6-2
 $$\begin{array} { | l | l | l | } 
\hline \text { Price (\$) } & \begin{array} { l } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline 0 & 21 & 0 \
\hline 1 & 18 & 4 \
\hline 2 & 15 & 8 \
\hline 3 & 12 & 12 \
\hline 4 & 9 & 16 \
\hline 5 & 6 & 20 \
\hline 6 & 3 & 24 \
\hline 7 & 0 & 28 \
\hline
\end{array}$$
-Refer to Table 6-2. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $2 would

Question 10

The presence of a price control in a market for a good or service usually is an indication that

Accepted Answer

A) an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B) the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C) policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D) policymakers correctly believed that price controls would generate no inequities of their own once imposed. 
A) an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B) the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C) policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D) policymakers correctly believed that price controls would generate no inequities of their own once imposed.

Question 11

Figure 6-9
  
-Refer to Figure 6-9. In this market, a minimum wage of $7 is

Accepted Answer

A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment. 
A) binding and creates a labor shortage. 
B) binding and creates unemployment. 
C) nonbinding and creates a labor shortage. 
D) nonbinding and creates neither a labor shortage nor unemployment.

Question 12

Figure 6-14
   ​
-Refer to Figure 6-14. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2 tax, the price paid by buyers will be

Accepted Answer

A) higher in the long run than in the short run. 
B) higher in the short run than in the long run. 
C) equivalent in the short run and the long run. 
D) unable to be determined without additional information. 
A) higher in the long run than in the short run. 
B) higher in the short run than in the long run. 
C) equivalent in the short run and the long run. 
D) unable to be determined without additional information.

Question 13

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-19
   ​
-Refer to Figure 6-19. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul

Question 15

Figure 6-19
   ​
-Refer to Figure 6-19. 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 16

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 floor at $13 for this product. Initially, is this price floor binding? Suppose that for some reason demand were to decrease to
 $$Q ^ { D } = 80 - 4 P$$ Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of the resulting shortage/surplus?

Accepted Answer

Initially the price floor is not binding

Question 17

In a particular market, market demand is given by the equation
QD = 60 - P
and market supply is given by the equation
QS = P
Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers?

Accepted Answer

If the number of transactions falls to 2

Question 18

The term tax incidence refers to

Accepted Answer

A) whether buyers or sellers of a good are required to send tax payments to the government. 
B) whether the demand curve or the supply curve shifts when the tax is imposed. 
C) the distribution of the tax burden between buyers and sellers. 
D) widespread view that taxes (and death) are the only certainties in life. 
A) whether buyers or sellers of a good are required to send tax payments to the government. 
B) whether the demand curve or the supply curve shifts when the tax is imposed. 
C) the distribution of the tax burden between buyers and sellers. 
D) widespread view that taxes (and death) are the only certainties in life.

Question 19

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 20

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Which of the following is not a result of rent control?

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Figure 6-7 -Refer to Figure 6-7. If the government imposes a price ceiling at $9, it would be

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

Figure 6-16 ​ ​ -Refer to Figure 6-16. A price floor set at $40 would create a surplus of 20 units.

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

The presence of a price control in a market for a good or service usually is an indication that

Figure 6-9 -Refer to Figure 6-9. In this market, a minimum wage of $7 is

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Figure 6-19 ​ -Refer to Figure 6-19. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-19 ​ -Refer to Figure 6-19. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

The term tax incidence refers to

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

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 6-16 -Refer to Figure 6-16. A price floor set at $40 would create a surplus of 20 units.

Figure 6-19 -Refer to Figure 6-19. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-19 -Refer to Figure 6-19. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?