Question 1

Because the supply and demand of housing are inelastic in the short run,the initial shortage caused by rent control is large.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-5
  
-Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the horizontal line on the graph.If the price control is a price floor,then the price control

Accepted Answer

A)  causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium. 
B)  causes the quantity supplied to increase by 40 units, relative to the initial equilibrium. 
C)  results in some firms being more successful than others in selling their goods. 
D)  All of the above are correct. 
A)  causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium. 
B)  causes the quantity supplied to increase by 40 units, relative to the initial equilibrium. 
C)  results in some firms being more successful than others in selling their goods. 
D)  All of the above are correct.

Question 3

Figure 6-26
  
-Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-20
  
-Refer to Figure 6-20.In the after-tax equilibrium,government collects

Accepted Answer

A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers. 
A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers.

Question 5

Figure 6-16
  
-Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $5 
B)  between $5 and $10 
C)  between $10 and $14 
D)  $14 
A)  $5 
B)  between $5 and $10 
C)  between $10 and $14 
D)  $14

Question 6

The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 7

A tax imposed on the buyers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive. 
A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive.

Question 8

Suppose that the demand for lava lamps is elastic,and the supply of lava lamps is inelastic.A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by

Accepted Answer

A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2. 
A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2.

Question 9

One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

Accepted Answer

A)  He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B)  He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C)  He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D)  He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city. 
A)  He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B)  He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C)  He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D)  He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

Question 10

When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.

Accepted Answer

A) True 
 B)False

Question 11

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 12

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 13

A surplus results when a

Accepted Answer

A)  nonbinding price floor is imposed on a market. 
B)  nonbinding price floor is removed from a market. 
C)  binding price floor is imposed on a market. 
D)  binding price floor is removed from a market. 
A)  nonbinding price floor is imposed on a market. 
B)  nonbinding price floor is removed from a market. 
C)  binding price floor is imposed on a market. 
D)  binding price floor is removed from a market.

Question 14

If a tax is levied on the buyers of a product,then the supply curve will

Accepted Answer

A)  not shift. 
B)  shift up. 
C)  shift down. 
D)  become flatter. 
A)  not shift. 
B)  shift up. 
C)  shift down. 
D)  become flatter.

Question 15

The U.S.Congress first instituted a minimum wage in

Accepted Answer

A)  1776. 
B)  1812. 
C)  1938. 
D)  1975. 
A)  1776. 
B)  1812. 
C)  1938. 
D)  1975.

Question 16

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 17

A tax on the sellers of coffee mugs

Accepted Answer

A)  increases the size of the coffee mug market. 
B)  decreases the size of the coffee mug market. 
C)  has no effect on the size of the coffee mug market. 
D)  may increase, decrease, or have no effect on the size of the coffee mug market. 
A)  increases the size of the coffee mug market. 
B)  decreases the size of the coffee mug market. 
C)  has no effect on the size of the coffee mug market. 
D)  may increase, decrease, or have no effect on the size of the coffee mug market.

Question 18

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 19

Table 6-2
  
-Refer to Table 6-2.A price ceiling set at $5 will

Accepted Answer

A)  be binding and will result in a shortage of 50 units. 
B)  be binding and will result in a shortage of 75 units. 
C)  be binding and will result in a shortage of 125 units. 
D)  not be binding. 
A)  be binding and will result in a shortage of 50 units. 
B)  be binding and will result in a shortage of 75 units. 
C)  be binding and will result in a shortage of 125 units. 
D)  not be binding.

Question 20

Figure 6-16
  
-Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 25 units 
B)  25 units 
C)  between 25 units and 50 units 
D)  greater than 50 units 
A)  less than 25 units 
B)  25 units 
C)  between 25 units and 50 units 
D)  greater than 50 units

Exam 6: Supply, Demand, And Government Policies.

Because the supply and demand of housing are inelastic in the short run,the initial shortage caused by rent control is large.

Figure 6-5 -Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the horizontal line on the graph.If the price control is a price floor,then the price control

Figure 6-26 -Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

Figure 6-20 -Refer to Figure 6-20.In the after-tax equilibrium,government collects

Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers.

A tax imposed on the buyers of a good will

Suppose that the demand for lava lamps is elastic,and the supply of lava lamps is inelastic.A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by

One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.

One common example of a price ceiling is rent control.

A tax on buyers increases the size of a market.

A surplus results when a

If a tax is levied on the buyers of a product,then the supply curve will

The U.S.Congress first instituted a minimum wage in

Price floors are typically imposed to benefit buyers.

A tax on the sellers of coffee mugs

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

Table 6-2 -Refer to Table 6-2.A price ceiling set at $5 will

Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

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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