Question 1

Which of the following is correct?

Accepted Answer

A)  Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent. 
B)  The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant. 
C)  The minimum wage is more often binding for teenagers than for other members of the labor force. 
D)  All firms consistently enforce minimum-wage laws. 
A)  Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent. 
B)  The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant. 
C)  The minimum wage is more often binding for teenagers than for other members of the labor force. 
D)  All firms consistently enforce minimum-wage laws.

Question 2

Buyers of a good bear the larger share of the tax burden when the
(i)supply is more elastic than the demand for the product.
(ii)demand in more elastic than the supply for the product.
(iii)tax is placed on the sellers of the product.
(iv)tax is placed on the buyers of the product.

Accepted Answer

A)  (i) only 
B)  (ii) only 
C)  (i) and (iii) only 
D)  (i) and (iv) only 
A)  (i) only 
B)  (ii) only 
C)  (i) and (iii) only 
D)  (i) and (iv) only

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Regardless of whether a tax is levied on sellers or buyers,taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Question 5

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Accepted Answer

A) True 
 B)False

Question 6

Long lines

Accepted Answer

A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 7

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Accepted Answer

A)  and the effective price received by sellers both increase. 
B)  increases, but the effective price received by sellers decreases. 
C)  decreases, but the effective price received by sellers increases. 
D)  and the effective price received by sellers both decrease. 
A)  and the effective price received by sellers both increase. 
B)  increases, but the effective price received by sellers decreases. 
C)  decreases, but the effective price received by sellers increases. 
D)  and the effective price received by sellers both decrease.

Question 8

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 9

Rent-control laws dictate

Accepted Answer

A)  the exact rent that landlords must charge tenants. 
B)  a maximum rent that landlords may charge tenants. 
C)  a minimum rent that landlords may charge tenants. 
D)  both a minimum rent and a maximum rent that landlords may charge tenants. 
A)  the exact rent that landlords must charge tenants. 
B)  a maximum rent that landlords may charge tenants. 
C)  a minimum rent that landlords may charge tenants. 
D)  both a minimum rent and a maximum rent that landlords may charge tenants.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-19
  
-Refer to Figure 6-19.Which of the following is correct?

Accepted Answer

A)  One-fourth of the burden of the tax falls on buyers, and three-fourths of the burden of the tax falls on sellers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers. 
A)  One-fourth of the burden of the tax falls on buyers, and three-fourths of the burden of the tax falls on sellers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-7
  
-Refer to Figure 6-7.For a price ceiling to be binding in this market,it would have to be set at

Accepted Answer

A)  any price below $6. 
B)  a price between $3 and $6. 
C)  a price between $6 and $9. 
D)  any price above $6. 
A)  any price below $6. 
B)  a price between $3 and $6. 
C)  a price between $6 and $9. 
D)  any price above $6.

Question 14

Figure 6-18
  
-Refer to Figure 6-18.Suppose the same supply and demand curves apply,and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.After the buyers pay the tax,relative to the case depicted in the figure,the burden on buyers will be

Accepted Answer

A)  larger, and the burden on sellers will be smaller. 
B)  smaller, and the burden on sellers will be larger. 
C)  the same, and the burden on sellers will be the same. 
D)  The relative burdens in the two cases cannot be determined without further information. 
A)  larger, and the burden on sellers will be smaller. 
B)  smaller, and the burden on sellers will be larger. 
C)  the same, and the burden on sellers will be the same. 
D)  The relative burdens in the two cases cannot be determined without further information.

Question 15

The minimum wage does not apply to

Accepted Answer

A)  jobs for teenagers. 
B)  jobs for members of minority groups. 
C)  unpaid internships. 
D)  jobs that include on-the-job training. 
A)  jobs for teenagers. 
B)  jobs for members of minority groups. 
C)  unpaid internships. 
D)  jobs that include on-the-job training.

Question 16

Figure 6-17
  
-Refer to Figure 6-17.How is the burden of the tax shared between buyers and sellers? Buyers bear

Accepted Answer

A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden. 
A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden.

Question 17

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Accepted Answer

A) True 
 B)False

Question 18

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Figure 6-6
  
-Refer to Figure 6-6.If the government imposes a price floor of $14 on this market,then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 40 units. 
A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 40 units.

Exam 6: Supply, Demand, And Government Policies.

Which of the following is correct?

Buyers of a good bear the larger share of the tax burden when the (i)supply is more elastic than the demand for the product. (ii)demand in more elastic than the supply for the product. (iii)tax is placed on the sellers of the product. (iv)tax is placed on the buyers of the product.

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

Regardless of whether a tax is levied on sellers or buyers,taxes encourage market activity.

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Long lines

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Rent-control laws dictate

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

Figure 6-19 -Refer to Figure 6-19.Which of the following is correct?

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

Figure 6-7 -Refer to Figure 6-7.For a price ceiling to be binding in this market,it would have to be set at

The minimum wage does not apply to

Figure 6-17 -Refer to Figure 6-17.How is the burden of the tax shared between buyers and sellers? Buyers bear

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Rent-control laws dictate a minimum rent that landlords may charge tenants.

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

Figure 6-6 -Refer to Figure 6-6.If the government imposes a price floor of $14 on this market,then there will be

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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