Question 1

Which principle is illustrated by the long-run effects of rent controls

Accepted Answer

A) Society faces a short-run tradeoff between unemployment and inflation. 
B) The cost of something is what you give up to get it. 
C) People respond to incentives. 
D) Government can sometimes improve on market outcomes. 
A) Society faces a short-run tradeoff between unemployment and inflation. 
B) The cost of something is what you give up to get it. 
C) People respond to incentives. 
D) Government can sometimes improve on market outcomes.

Question 2

Market demand is given as QD = 120 - 2P.Market supply is given as QS = P + 30.Which legally imposed price would constitute a binding price floor

Accepted Answer

A) $10 
B) $15 
C) $30 
D) $45 
A) $10 
B) $15 
C) $30 
D) $45

Question 3

When will a price ceiling be binding

Accepted Answer

A) only if it is set equal to equilibrium price 
B) only if it is set above equilibrium price 
C) only if it is set below equilibrium price 
D) only if it is set near to the equilibrium price 
A) only if it is set equal to equilibrium price 
B) only if it is set above equilibrium price 
C) only if it is set below equilibrium price 
D) only if it is set near to the equilibrium price

Question 4

What will a minimum wage do

Accepted Answer

A) It will alter both the quantity demanded and quantity supplied of labour. 
B) It will affect only the quantity of labour firms will demand at the higher wage, but does not affect the quantity supplied of labour. 
C) It will have no effect on the quantity demanded or quantity supplied of labour since the equilibrium wage will not change. 
D) It will cause only temporary unemployment, since the market will adjust and eliminate the surplus of workers. 
A) It will alter both the quantity demanded and quantity supplied of labour. 
B) It will affect only the quantity of labour firms will demand at the higher wage, but does not affect the quantity supplied of labour. 
C) It will have no effect on the quantity demanded or quantity supplied of labour since the equilibrium wage will not change. 
D) It will cause only temporary unemployment, since the market will adjust and eliminate the surplus of workers.

Question 5

What is NOT a mechanism of rationing used by landlords in cities with rent control

Accepted Answer

A) tenants without children 
B) race 
C) price 
D) bribes 
A) tenants without children 
B) race 
C) price 
D) bribes

Question 6

What will happen if a tax is placed on skateboard buyers

Accepted Answer

A) Supply will shift upward, causing equilibrium price to rise and equilibrium quantity to fall. 
B) Demand will shift upward, causing both equilibrium price and quantity to rise. 
C) Supply will shift downward, causing equilibrium price to fall and equilibrium quantity to rise. 
D) Demand will shift downward, causing both equilibrium price and quantity to fall. 
A) Supply will shift upward, causing equilibrium price to rise and equilibrium quantity to fall. 
B) Demand will shift upward, causing both equilibrium price and quantity to rise. 
C) Supply will shift downward, causing equilibrium price to fall and equilibrium quantity to rise. 
D) Demand will shift downward, causing both equilibrium price and quantity to fall.

Question 7

Figure 6-9
  
-Refer to Figure 6-9.What is the price sellers receive after the tax is imposed

Accepted Answer

A) $8.00 
B) $12.00 
C) $14.00 
D) $18.00 
A) $8.00 
B) $12.00 
C) $14.00 
D) $18.00

Question 8

What does a binding price ceiling cause

Accepted Answer

A) a shortage that cannot be eliminated through market adjustment 
B) a surplus that cannot be eliminated through market adjustment 
C) a shortage that is temporary, since market adjustment will cause price to rise 
D) a surplus that is temporary, since market adjustment will cause price to rise 
A) a shortage that cannot be eliminated through market adjustment 
B) a surplus that cannot be eliminated through market adjustment 
C) a shortage that is temporary, since market adjustment will cause price to rise 
D) a surplus that is temporary, since market adjustment will cause price to rise

Question 9

When OPEC raised the price of crude oil in the 1970s,what was the result

Accepted Answer

A) Demand for gasoline increased. 
B) Demand for gasoline decreased. 
C) Supply of gasoline increased. 
D) Supply of gasoline decreased. 
A) Demand for gasoline increased. 
B) Demand for gasoline decreased. 
C) Supply of gasoline increased. 
D) Supply of gasoline decreased.

Question 10

How would rationing by long lines best be described

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-13
  
-Refer to Figure 6-13.What is the price sellers receive after the tax is imposed

Accepted Answer

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

Question 13

Suppose a tax is imposed on the buyers of a product.On whom will the burden of the tax fall

Accepted Answer

A) on the buyers or the sellers 
B) on the buyers and the sellers 
C) on the buyers or the government 
D) on the buyers and the government 
A) on the buyers or the sellers 
B) on the buyers and the sellers 
C) on the buyers or the government 
D) on the buyers and the government

Question 14

How is a tax on lemonade divided when it is placed on the sellers of lemonade

Accepted Answer

A) The sellers pay the entire tax. 
B) The buyers pay the entire tax. 
C) Buyers and sellers share the burden of the tax. 
D) The burden of the tax will always be equally divided between the buyer and the seller. 
A) The sellers pay the entire tax. 
B) The buyers pay the entire tax. 
C) Buyers and sellers share the burden of the tax. 
D) The burden of the tax will always be equally divided between the buyer and the seller.

Question 15

Figure 6-7
  
-Refer to Figure 6-7.At which price would a binding price floor exist

Accepted Answer

A) $2.00 
B) $4.00 
C) $5.00 
D) any price above $6.00 
A) $2.00 
B) $4.00 
C) $5.00 
D) any price above $6.00

Question 16

Market demand is given as QD = 120 - 2P.Market supply is given as QS = P + 30.Which legally imposed price would constitute a binding price ceiling

Accepted Answer

A) $20 
B) $30 
C) $40 
D) $50 
A) $20 
B) $30 
C) $40 
D) $50

Question 17

The housing shortages caused by rent controls are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-10
  
-Refer to Figure 6-10.What is the equilibrium price in the market after the tax is imposed

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 19

Figure 6-9
  
-Refer to Figure 6-9.What is the share of the tax burden per unit that sellers would pay

Accepted Answer

A) $4.00 
B) $6.00 
C) $8.00 
D) $10.0 
A) $4.00 
B) $6.00 
C) $8.00 
D) $10.0

Question 20

Suppose that the demand for digital pianos is price inelastic and the supply of digital pianos is price elastic.By what amount will a tax of $1.00 per frame levied on buyers of picture frames increase the equilibrium price paid by buyers of digital pianos

Accepted Answer

A) by less than $0.50 
B) by more than $0.50 but less than $1.00 
C) by $1.00 
D) by more than $1.00 
A) by less than $0.50 
B) by more than $0.50 but less than $1.00 
C) by $1.00 
D) by more than $1.00

Exam 6: Supply, demand, and Government Policies

Which principle is illustrated by the long-run effects of rent controls

Market demand is given as QD = 120 - 2P.Market supply is given as QS = P + 30.Which legally imposed price would constitute a binding price floor

When will a price ceiling be binding

What will a minimum wage do

What is NOT a mechanism of rationing used by landlords in cities with rent control

What will happen if a tax is placed on skateboard buyers

Figure 6-9 -Refer to Figure 6-9.What is the price sellers receive after the tax is imposed

What does a binding price ceiling cause

When OPEC raised the price of crude oil in the 1970s,what was the result

How would rationing by long lines best be described

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

Figure 6-13 -Refer to Figure 6-13.What is the price sellers receive after the tax is imposed

Suppose a tax is imposed on the buyers of a product.On whom will the burden of the tax fall

How is a tax on lemonade divided when it is placed on the sellers of lemonade

Figure 6-7 -Refer to Figure 6-7.At which price would a binding price floor exist

Market demand is given as QD = 120 - 2P.Market supply is given as QS = P + 30.Which legally imposed price would constitute a binding price ceiling

The housing shortages caused by rent controls are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Figure 6-10 -Refer to Figure 6-10.What is the equilibrium price in the market after the tax is imposed

Figure 6-9 -Refer to Figure 6-9.What is the share of the tax burden per unit that sellers would pay

Suppose that the demand for digital pianos is price inelastic and the supply of digital pianos is price elastic.By what amount will a tax of $1.00 per frame levied on buyers of picture frames increase the equilibrium price paid by buyers of digital pianos

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Market demand is given as Q_D= 120 - 2P.Market supply is given as Q_S= P + 30.Which legally imposed price would constitute a binding price floor

Market demand is given as Q_D= 120 - 2P.Market supply is given as Q_S= P + 30.Which legally imposed price would constitute a binding price ceiling