Question 1

If a price ceiling is below equilibrium price,the quantity demanded will exceed the quantity supplied.

Accepted Answer

A) True 
 B)False

Question 2

The presence of price controls in a market usually is an indication that

Accepted Answer

A) an insufficient quantity of a 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, in that market, price controls would generate no inequities of their own. 
A) an insufficient quantity of a 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, in that market, price controls would generate no inequities of their own.

Question 3

Which of the following statements is correct?

Accepted Answer

A) A price ceiling is not binding when the price ceiling is set above the equilibrium price. 
B) A price floor is not binding when the price floor is set below the equilibrium price. 
C) A binding price ceiling causes a shortage and a binding price floor causes a surplus. 
D) All of the above are correct. 
A) A price ceiling is not binding when the price ceiling is set above the equilibrium price. 
B) A price floor is not binding when the price floor is set below the equilibrium price. 
C) A binding price ceiling causes a shortage and a binding price floor causes a surplus. 
D) All of the above are correct.

Question 4

When policymakers set prices by legal decree,they

Accepted Answer

A) are usually following the advice of mainstream economists. 
B) are usually improving the organization of economic activity. 
C) are obscuring the signals that normally guide the allocation of society's resources. 
D) are demonstrating a willingness to sacrifice equity for the sake of a gain in efficiency. 
A) are usually following the advice of mainstream economists. 
B) are usually improving the organization of economic activity. 
C) are obscuring the signals that normally guide the allocation of society's resources. 
D) are demonstrating a willingness to sacrifice equity for the sake of a gain in efficiency.

Question 5

Figure 6-10
  
-Refer to Figure 6-10.The effective price sellers receive after the tax is imposed is

Accepted Answer

A) $1.00. 
B) $3.50. 
C) $5.00. 
D) $6.00. 
A) $1.00. 
B) $3.50. 
C) $5.00. 
D) $6.00.

Question 6

An example of a price floor is

Accepted Answer

A) the regulation of gasoline prices in the U.S.in the 1970s. 
B) rent control. 
C) the minimum wage. 
D) any restriction on price that leads to a shortage. 
A) the regulation of gasoline prices in the U.S.in the 1970s. 
B) rent control. 
C) the minimum wage. 
D) any restriction on price that leads to a shortage.

Question 7

A binding minimum wage in a competitive labor market creates unemployment.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-11. On the graph below, the shift of the supply curve from S₁ to S₂ represents the imposition of a tax on a good. On the axes, Q represents the quantity of the good and P represents the price.
  
-Consider Figure 6-11.As a result of the tax,

Accepted Answer

A) the price paid by buyers rises from $5 to $7. 
B) the price received by sellers (after paying the tax) falls from $5 to $3. 
C) the government collects $30 in tax revenue. 
D) All of the above are correct. 
A) the price paid by buyers rises from $5 to $7. 
B) the price received by sellers (after paying the tax) falls from $5 to $3. 
C) the government collects $30 in tax revenue. 
D) All of the above are correct.

Question 9

A price ceiling is binding when it is set

Accepted Answer

A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus. 
A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus.

Question 10

If a binding price ceiling were imposed in the computer market,

Accepted Answer

A) the quantity of computers demanded would increase. 
B) the quantity of computers supplied would decrease. 
C) a shortage of computers would develop. 
D) All of the above are correct. 
A) the quantity of computers demanded would increase. 
B) the quantity of computers supplied would decrease. 
C) a shortage of computers would develop. 
D) All of the above are correct.

Question 11

Figure 6-1
  
-Refer to Figure 6-1.In which panel(s)of the figure would there be a shortage of the good at the ceiling price?

Accepted Answer

A) panel (a) but not panel (b) 
B) panel (b) but not panel (a) 
C) panel (a) and panel (b) 
D) neither panel (a) nor panel (b) 
A) panel (a) but not panel (b) 
B) panel (b) but not panel (a) 
C) panel (a) and panel (b) 
D) neither panel (a) nor panel (b)

Question 12

Figure 6-13
  
-Refer to Figure 6-13.The effective price that will be paid by buyers after the tax is

Accepted Answer

A) P₀. 
B) P₁. 
C) P₂. 
D) impossible to determine. 
A) P₀. 
B) P₁. 
C) P₂. 
D) impossible to determine.

Question 13

When the government passes a law requiring buyers of a good to send one dollar to the government for every unit of the good they buy,

Accepted Answer

A) the supply curve for the good shifts to the right. 
B) the demand curve for the good shifts to the left. 
C) more than 50 percent of the burden of the tax falls on buyers. 
D) the government collects less tax revenue than it would collect if the sellers of the good were required to send one dollar to the government for every unit of the good they sell. 
A) the supply curve for the good shifts to the right. 
B) the demand curve for the good shifts to the left. 
C) more than 50 percent of the burden of the tax falls on buyers. 
D) the government collects less tax revenue than it would collect if the sellers of the good were required to send one dollar to the government for every unit of the good they sell.

Question 14

The Earned Income Tax Credit is an example of

Accepted Answer

A) a minimum-wage policy. 
B) a price ceiling. 
C) a wage subsidy. 
D) a rent subsidy. 
A) a minimum-wage policy. 
B) a price ceiling. 
C) a wage subsidy. 
D) a rent subsidy.

Question 15

If we were to construct an elasticity of teenage employment with respect to the minimum wage,the value of that elasticity would be about

Accepted Answer

A) -1.0 to -0.4. 
B) -0.3 to -0.1. 
C) 0.2 to 0.7. 
D) 0.5 to 1.0. 
A) -1.0 to -0.4. 
B) -0.3 to -0.1. 
C) 0.2 to 0.7. 
D) 0.5 to 1.0.

Question 16

Since half of the FICA tax is paid by firms,and the other half is paid by workers,the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a correct statement about the labor market?

Accepted Answer

A) Workers determine the supply of labor, and firms determine the demand for labor. 
B) Workers determine the demand for labor, and firms determine the supply of labor. 
C) Workers determine the supply of labor, and government determines the demand for labor. 
D) The forces of supply and demand, while present in the labor market, have nothing to balance in that market. 
A) Workers determine the supply of labor, and firms determine the demand for labor. 
B) Workers determine the demand for labor, and firms determine the supply of labor. 
C) Workers determine the supply of labor, and government determines the demand for labor. 
D) The forces of supply and demand, while present in the labor market, have nothing to balance in that market.

Question 18

Rationing by long lines is

Accepted Answer

A) inefficient, because it wastes buyers' time. 
B) efficient, because those who are willing to wait the longest get the goods. 
C) the only way scarce goods can be rationed. 
D) only necessary if price ceilings are not binding. 
A) inefficient, because it wastes buyers' time. 
B) efficient, because those who are willing to wait the longest get the goods. 
C) the only way scarce goods can be rationed. 
D) only necessary if price ceilings are not binding.

Question 19

If a price ceiling is not binding,it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-5
  
-Refer to Figure 6-5.If the government imposes a price ceiling of $2.00 in this market,the result is a

Accepted Answer

A) surplus of 30 units of the good. 
B) shortage of 20 units of the good. 
C) shortage of 30 units of the good. 
D) shortage of 50 units of the good. 
A) surplus of 30 units of the good. 
B) shortage of 20 units of the good. 
C) shortage of 30 units of the good. 
D) shortage of 50 units of the good.

Exam 6: Supply, demand, and Government Policies

If a price ceiling is below equilibrium price,the quantity demanded will exceed the quantity supplied.

The presence of price controls in a market usually is an indication that

Which of the following statements is correct?

When policymakers set prices by legal decree,they

Figure 6-10 -Refer to Figure 6-10.The effective price sellers receive after the tax is imposed is

An example of a price floor is

A binding minimum wage in a competitive labor market creates unemployment.

Figure 6-11. On the graph below, the shift of the supply curve from S₁ to S₂ represents the imposition of a tax on a good. On the axes, Q represents the quantity of the good and P represents the price. -Consider Figure 6-11.As a result of the tax,

A price ceiling is binding when it is set

If a binding price ceiling were imposed in the computer market,

Figure 6-1 -Refer to Figure 6-1.In which panel(s)of the figure would there be a shortage of the good at the ceiling price?

Figure 6-13 -Refer to Figure 6-13.The effective price that will be paid by buyers after the tax is

When the government passes a law requiring buyers of a good to send one dollar to the government for every unit of the good they buy,

The Earned Income Tax Credit is an example of

If we were to construct an elasticity of teenage employment with respect to the minimum wage,the value of that elasticity would be about

Since half of the FICA tax is paid by firms,and the other half is paid by workers,the burden of the tax must fall equally on firms and workers.

Which of the following is a correct statement about the labor market?

Rationing by long lines is

If a price ceiling is not binding,it will have no effect on the market.

Figure 6-5 -Refer to Figure 6-5.If the government imposes a price ceiling of $2.00 in this market,the result is a

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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