Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-1

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

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 3

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  every buyer in the market benefits. 
B)  every buyer and seller in the market benefits. 
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines. 
D)  some buyers will not be able to buy any amount of the good. 
A)  every buyer in the market benefits. 
B)  every buyer and seller in the market benefits. 
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines. 
D)  some buyers will not be able to buy any amount of the good.

Question 4

The minimum wage has its greatest impact on the market for teenage labor.

Accepted Answer

A) True 
 B)False

Question 5

Using a supply and demand diagram,show a labor market with a binding minimum wage.Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

a.For this example,a $300 price ceiling

Question 6

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 7

Figure 6-18
  
-Refer to Figure 6-18.The effective price sellers receive after the tax is imposed is

Accepted Answer

A)  $2.50. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00. 
A)  $2.50. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00.

Question 8

A binding minimum wage tends to

Accepted Answer

A)  cause a labor surplus. 
B)  cause unemployment. 
C)  have the greatest impact in the market for teenage labor. 
D)  All of the above are correct. 
A)  cause a labor surplus. 
B)  cause unemployment. 
C)  have the greatest impact in the market for teenage labor. 
D)  All of the above are correct.

Question 9

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 10

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.
  
-Refer to Table 6-4.Following the imposition of a price floor $3 above the equilibrium price,irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor.The resulting market price is

Accepted Answer

A)  $2. 
B)  $3. 
C)  $4. 
D)  $5. 
A)  $2. 
B)  $3. 
C)  $4. 
D)  $5.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-10
  
-Refer to Figure 6-10.A price ceiling set at

Accepted Answer

A)  $6 will be binding and will result in a shortage of 8 units. 
B)  $6 will be binding and will result in a shortage of 4 units. 
C)  $16 will be binding and will result in a shortage of 12 units. 
D)  $16 will be binding and will result in a shortage of 6 units. 
A)  $6 will be binding and will result in a shortage of 8 units. 
B)  $6 will be binding and will result in a shortage of 4 units. 
C)  $16 will be binding and will result in a shortage of 12 units. 
D)  $16 will be binding and will result in a shortage of 6 units.

Question 13

A payroll tax is a

Accepted Answer

A)  fixed number of dollars that every firm must pay to the government for each worker that the firm hires. 
B)  tax that each firm must pay to the government before the firm can hire workers and operate its business. 
C)  tax on the wages that firms pay their workers. 
D)  tax on all wages above the minimum wage. 
A)  fixed number of dollars that every firm must pay to the government for each worker that the firm hires. 
B)  tax that each firm must pay to the government before the firm can hire workers and operate its business. 
C)  tax on the wages that firms pay their workers. 
D)  tax on all wages above the minimum wage.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 16

Congress intended that

Accepted Answer

A)  the entire FICA tax be paid by workers. 
B)  the entire FICA tax be paid by firms. 
C)  one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D)  half the FICA tax be paid by workers, and half be paid by firms. 
A)  the entire FICA tax be paid by workers. 
B)  the entire FICA tax be paid by firms. 
C)  one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D)  half the FICA tax be paid by workers, and half be paid by firms.

Question 17

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 18

In the United States,before OPEC increased the price of crude oil in 1973,there was

Accepted Answer

A)  no price ceiling on gasoline. 
B)  a nonbinding price ceiling on gasoline. 
C)  a binding price ceiling on gasoline. 
D)  a nonbinding price floor on gasoline. 
A)  no price ceiling on gasoline. 
B)  a nonbinding price ceiling on gasoline. 
C)  a binding price ceiling on gasoline. 
D)  a nonbinding price floor on gasoline.

Question 19

If a tax is levied on the sellers of a product,then there will be a(n)

Accepted Answer

A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  movement up and to the right along the supply curve. 
D)  movement down and to the left along the supply curve. 
A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  movement up and to the right along the supply curve. 
D)  movement down and to the left along the supply curve.

Question 20

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development. 
A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.

Exam 6: Supply, Demand, And Government Policies.

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

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

When a binding price ceiling is imposed on a market to benefit buyers,

The minimum wage has its greatest impact on the market for teenage labor.

Using a supply and demand diagram,show a labor market with a binding minimum wage.Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

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.

Figure 6-18 -Refer to Figure 6-18.The effective price sellers receive after the tax is imposed is

A binding minimum wage tends to

Not all sellers benefit from a binding price floor.

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

Figure 6-10 -Refer to Figure 6-10.A price ceiling set at

A payroll tax is a

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

A price floor is a legal minimum on the price at which a good or service can be sold.

Congress intended that

Prices are inefficient rationing devices.

In the United States,before OPEC increased the price of crude oil in 1973,there was

If a tax is levied on the sellers of a product,then there will be a(n)

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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