Question 1

Price controls

Accepted Answer

A) always produce a fair outcome. 
B) always produce an efficient outcome. 
C) can generate inequities of their own. 
D) All of the above are correct. 
A) always produce a fair outcome. 
B) always produce an efficient outcome. 
C) can generate inequities of their own. 
D) All of the above are correct. C

Question 2

If a price floor is not binding, then

Accepted Answer

A) there will be a surplus in the market. 
B) there will be a shortage in the market. 
C) there will be no effect on the market price or quantity sold. 
D) the market will be less efficient than it would be without the price floor. 
A) there will be a surplus in the market. 
B) there will be a shortage in the market. 
C) there will be no effect on the market price or quantity sold. 
D) the market will be less efficient than it would be without the price floor. C

Question 3

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False  False

Question 4

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Accepted Answer

A) the demand curve for textbooks shifts downward by $5. 
B) buyers of textbooks pay $5 more per textbook than they were paying before the tax. 
C) sellers of textbooks are unaffected by the tax. 
D) All of the above are correct. 
A) the demand curve for textbooks shifts downward by $5. 
B) buyers of textbooks pay $5 more per textbook than they were paying before the tax. 
C) sellers of textbooks are unaffected by the tax. 
D) All of the above are correct.

Question 5

Rent control

Accepted Answer

A) serves as an example of how a social problem can be alleviated or even solved by government policies. 
B) serves as an example of a price ceiling. 
C) is regarded by most economists as an efficient way of helping the poor. 
D) is the most efficient way to allocate scarce housing resources. 
A) serves as an example of how a social problem can be alleviated or even solved by government policies. 
B) serves as an example of a price ceiling. 
C) is regarded by most economists as an efficient way of helping the poor. 
D) is the most efficient way to allocate scarce housing resources.

Question 6

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Accepted Answer

A) decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
B) decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
C) increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
D) increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
A) decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
B) decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
C) increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
D) increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.

Question 7

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 8

Which of the following is correct?

Accepted Answer

A) Rent control and the minimum wage are both examples of price ceilings. 
B) Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. 
C) Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. 
D) Rent control and the minimum wage are both examples of price floors. 
A) Rent control and the minimum wage are both examples of price ceilings. 
B) Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. 
C) Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. 
D) Rent control and the minimum wage are both examples of price floors.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-14
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-14. The amount of the tax per unit is

Accepted Answer

A) $6. 
B) $8. 
C) $14. 
D) $18. 
A) $6. 
B) $8. 
C) $14. 
D) $18.

Question 11

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Accepted Answer

A) raise revenue from the wealthy. 
B) prevent wealthy people from buying luxuries. 
C) force producers of luxury goods to reduce employment. 
D) limit exports of luxury goods to other countries. 
A) raise revenue from the wealthy. 
B) prevent wealthy people from buying luxuries. 
C) force producers of luxury goods to reduce employment. 
D) limit exports of luxury goods to other countries.

Question 12

The imposition of a binding price floor on a market causes quantity demanded to be

Accepted Answer

A) greater than quantity supplied. 
B) less than quantity supplied. 
C) equal to quantity supplied. 
D) Both a) and b) are possible. 
A) greater than quantity supplied. 
B) less than quantity supplied. 
C) equal to quantity supplied. 
D) Both a) and b) are possible.

Question 13

If the government removes a binding price floor from a market, then the price received by sellers will

Accepted Answer

A) decrease, and the quantity sold in the market will decrease. 
B) decrease, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) increase, and the quantity sold in the market will increase. 
A) decrease, and the quantity sold in the market will decrease. 
B) decrease, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) increase, and the quantity sold in the market will increase.

Question 14

Figure 6-18  
-Refer to Figure 6-18. Buyers pay how much of the tax per unit?

Accepted Answer

A) $1. 
B) $1.50. 
C) $2.50. 
D) $3.50. 
A) $1. 
B) $1.50. 
C) $2.50. 
D) $3.50.

Question 15

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Accepted Answer

A) True 
 B)False

Question 16

When a tax is placed on the sellers of a product, buyers pay

Accepted Answer

A) more, and sellers receive more than they did before the tax. 
B) more, and sellers receive less than they did before the tax. 
C) less, and sellers receive more than they did before the tax. 
D) less, and sellers receive less than they did before the tax. 
A) more, and sellers receive more than they did before the tax. 
B) more, and sellers receive less than they did before the tax. 
C) less, and sellers receive more than they did before the tax. 
D) less, and sellers receive less than they did before the tax.

Question 17

Which of the following is not correct?

Accepted Answer

A) Some states in the U.S. mandate minimum wages above the federal level. 
B) Most European nations have minimum-wage laws. 
C) The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom. 
D) The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act. 
A) Some states in the U.S. mandate minimum wages above the federal level. 
B) Most European nations have minimum-wage laws. 
C) The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom. 
D) The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act.

Question 18

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Accepted Answer

A) price will no longer be the mechanism that rations scarce resources. 
B) long lines of buyers may develop. 
C) sellers could ration the good or service according to their own personal biases. 
D) All of the above are correct. 
A) price will no longer be the mechanism that rations scarce resources. 
B) long lines of buyers may develop. 
C) sellers could ration the good or service according to their own personal biases. 
D) All of the above are correct.

Question 19

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

Accepted Answer

A) most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B) most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C) the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D) a large percentage of smokers to quit smoking in response to the tax. 
A) most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B) most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C) the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D) a large percentage of smokers to quit smoking in response to the tax.

Question 20

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

Accepted Answer

A) increase by more than $1,000. 
B) increase by exactly $1,000. 
C) increase by less than $1,000. 
D) decrease by an indeterminate amount. 
A) increase by more than $1,000. 
B) increase by exactly $1,000. 
C) increase by less than $1,000. 
D) decrease by an indeterminate amount.

Exam 6: Supply, Demand, and Government Policies

Price controls

If a price floor is not binding, then

A tax of $1 on buyers always decreases the equilibrium price by $1.

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Rent control

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Rent-control laws dictate

Which of the following is correct?

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

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14. The amount of the tax per unit is

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

The imposition of a binding price floor on a market causes quantity demanded to be

If the government removes a binding price floor from a market, then the price received by sellers will

Figure 6-18 -Refer to Figure 6-18. Buyers pay how much of the tax per unit?

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

When a tax is placed on the sellers of a product, buyers pay

Which of the following is not correct?

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

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

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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