Question 1

Economists generally believe that rent control is

Accepted Answer

A) an efficient and equitable way to help the poor. 
B) not efficient, but the best available means of solving a serious social problem. 
C) a highly inefficient way to help the poor raise their standard of living. 
D) an efficient way to allocate housing, but not a good way to help the poor. 
A) an efficient and equitable way to help the poor. 
B) not efficient, but the best available means of solving a serious social problem. 
C) a highly inefficient way to help the poor raise their standard of living. 
D) an efficient way to allocate housing, but not a good way to help the poor.

Question 2

Figure 6-14.
  
-Refer to Figure 6-14.As the figure is drawn,who directly pays the tax to the government?

Accepted Answer

A) The buyers pay the full tax to the government. 
B) The sellers pay the full tax to the government. 
C) A portion of the tax is paid to the government by buyers and the remaining portion is paid to the government by sellers. 
D) As the figure is drawn, any of the above is possible. 
A) The buyers pay the full tax to the government. 
B) The sellers pay the full tax to the government. 
C) A portion of the tax is paid to the government by buyers and the remaining portion is paid to the government by sellers. 
D) As the figure is drawn, any of the above is possible.

Question 3

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 4

Figure 6-4
  
-Refer to Figure 6-4.If the government imposes a price ceiling in this market at a price of $5.00,the result would be a

Accepted Answer

A) shortage of 20 units. 
B) shortage of 10 units. 
C) surplus of 20 units. 
D) surplus of 10 units. 
A) shortage of 20 units. 
B) shortage of 10 units. 
C) surplus of 20 units. 
D) surplus of 10 units.

Question 5

Using the graph shown,answer the following questions.
a.What was the equilibrium price and quantity in this market before the tax?
b.What is the amount of the tax?
c.How much of the tax will the buyers pay?
d.How much of the tax will the sellers pay?
e.How much will the buyer pay for the product after the tax is imposed?
f.How much will the seller receive after the tax is imposed?
g.As a result of the tax, what has happened to the level of market activity?

Accepted Answer

a. Equilibrium price is $8 and equilibri

Question 6

You have responsibility for economic policy in the country of Freedonia.Recently the neighboring country of Sylvania has cut off all exports of oranges to Freedonia.Harpo,who is one of your advisors,suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges.Chico,another one of your advisors,argues that without a binding price floor,a shortage will certainly develop.Zeppo,a third advisor,says that the best way to avoid a shortage of oranges is to take no action at all.Which of your three advisors is most likely to have studied economics?

Accepted Answer

A) Harpo 
B) Chico 
C) Zeppo 
D) Apparently, all three advisors have studied economics, but their views on positive economics are different. 
A) Harpo 
B) Chico 
C) Zeppo 
D) Apparently, all three advisors have studied economics, but their views on positive economics are different.

Question 7

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.

Question 8

Suppose that a tax is placed on DVDs.If the sellers end up bearing most of the tax burden,we know that the

Accepted Answer

A) demand is more inelastic than supply. 
B) supply is more inelastic than demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments. 
A) demand is more inelastic than supply. 
B) supply is more inelastic than demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments.

Question 9

If a tax is levied on the sellers of a product,the demand curve

Accepted Answer

A) will shift downward. 
B) will shift upward. 
C) will shift either upward or downward, depending on the amount of the tax. 
D) will not shift. 
A) will shift downward. 
B) will shift upward. 
C) will shift either upward or downward, depending on the amount of the tax. 
D) will not shift.

Question 10

Figure 6-9
  
-Refer to Figure 6-9.How much tax revenue does this tax produce for the government?

Accepted Answer

A) $480 
B) $600 
C) $800 
D) $1,080 
A) $480 
B) $600 
C) $800 
D) $1,080

Question 11

If buyers of a product are required to pay a tax,the demand curve for the product will shift downward by exactly the size of the tax.

Accepted Answer

A) True 
 B)False

Question 12

If a tax is imposed on a market with inelastic demand and elastic supply,

Accepted Answer

A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared. 
A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared.

Question 13

Figure 6-1
  
-Refer to Figure 6-1.A binding price ceiling is shown in

Accepted Answer

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

Question 14

Figure 6-6
  
-Refer to Figure 6-6.Which of the following statements best relates the figure to the events of the 1970s?

Accepted Answer

A) Buyers of gasoline paid a price of P₁ before 1973; they paid a price of P₂ after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P₁ before 1973; they paid a price of P₃ after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P₂ before 1973; they paid a price of P₃ after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973. 
A) Buyers of gasoline paid a price of P₁ before 1973; they paid a price of P₂ after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P₁ before 1973; they paid a price of P₃ after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P₂ before 1973; they paid a price of P₃ after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

Question 15

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 commute 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 commute long distances.

Question 16

Figure 6-9
  
-Refer to Figure 6-9.The price received by sellers after the tax is imposed is

Accepted Answer

A) $18. 
B) $14. 
C) $12. 
D) $8. 
A) $18. 
B) $14. 
C) $12. 
D) $8.

Question 17

Which of the following statements about rent control in New York City is accurate?

Accepted Answer

A) Rent control has proven successful in providing low-cost housing for poor people. 
B) Rent control has produced an increase in available rental units. 
C) Many well-to-do people live in rent-controlled apartments. 
D) All of the above are accurate statements. 
A) Rent control has proven successful in providing low-cost housing for poor people. 
B) Rent control has produced an increase in available rental units. 
C) Many well-to-do people live in rent-controlled apartments. 
D) All of the above are accurate statements.

Question 18

A price ceiling that is not binding will

Accepted Answer

A) cause a surplus in the market. 
B) cause a shortage in the market. 
C) cause the market to be less efficient than it would be without the price ceiling. 
D) have no effect on the market price. 
A) cause a surplus in the market. 
B) cause a shortage in the market. 
C) cause the market to be less efficient than it would be without the price ceiling. 
D) have no effect on the market price.

Question 19

A price floor is binding if it

Accepted Answer

A) is set lower than the equilibrium market price. 
B) results in an observed price that is the same as the equilibrium price. 
C) leads to a surplus. 
D) is strictly enforced by the government. 
A) is set lower than the equilibrium market price. 
B) results in an observed price that is the same as the equilibrium price. 
C) leads to a surplus. 
D) is strictly enforced by the government.

Question 20

Figure 6-14.
  
-Refer to Figure 6-14.The effective price that buyers will pay after the tax is imposed is

Accepted Answer

A) $24. 
B) $16. 
C) $10. 
D) $8. 
A) $24. 
B) $16. 
C) $10. 
D) $8.

Exam 6: Supply, demand, and Government Policies

Economists generally believe that rent control is

Figure 6-14. -Refer to Figure 6-14.As the figure is drawn,who directly pays the tax to the government?

A payroll tax is a

Figure 6-4 -Refer to Figure 6-4.If the government imposes a price ceiling in this market at a price of $5.00,the result would be a

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

Suppose that a tax is placed on DVDs.If the sellers end up bearing most of the tax burden,we know that the

If a tax is levied on the sellers of a product,the demand curve

Figure 6-9 -Refer to Figure 6-9.How much tax revenue does this tax produce for the government?

If buyers of a product are required to pay a tax,the demand curve for the product will shift downward by exactly the size of the tax.

If a tax is imposed on a market with inelastic demand and elastic supply,

Figure 6-1 -Refer to Figure 6-1.A binding price ceiling is shown in

Figure 6-6 -Refer to Figure 6-6.Which of the following statements best relates the figure to the events of the 1970s?

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

Figure 6-9 -Refer to Figure 6-9.The price received by sellers after the tax is imposed is

Which of the following statements about rent control in New York City is accurate?

A price ceiling that is not binding will

A price floor is binding if it

Figure 6-14. -Refer to Figure 6-14.The effective price that buyers will pay after the tax is imposed 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 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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