Question 1

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

Accepted Answer

A) and the price paid by buyers both increase. 
B) increases, but the price paid by buyers decreases. 
C) decreases, but the price paid by buyers increases. 
D) and the price paid by buyers both decrease. 
A) and the price paid by buyers both increase. 
B) increases, but the price paid by buyers decreases. 
C) decreases, but the price paid by buyers increases. 
D) and the price paid by buyers both decrease.

Question 2

Which of the following is correct?

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) The labor market is a single market for all different types of workers. 
D) The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor. 
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) The labor market is a single market for all different types of workers. 
D) The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor.

Question 3

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

Question 4

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 5

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

Accepted Answer

A) waiting lists 
B) race 
C) price 
D) bribes 
A) waiting lists 
B) race 
C) price 
D) bribes

Question 6

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Accepted Answer

A) $2 
B) $3 
C) $4 
D) $6 
A) $2 
B) $3 
C) $4 
D) $6

Question 7

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Accepted Answer

A) 47 percent favored eliminating the minimum wage. 
B) 14 percent would maintain the minimum wage at its current level. 
C) 38 percent would increase the minimum wage. 
D) 10 percent would decrease the minimum wage. 
A) 47 percent favored eliminating the minimum wage. 
B) 14 percent would maintain the minimum wage at its current level. 
C) 38 percent would increase the minimum wage. 
D) 10 percent would decrease the minimum wage.

Question 8

The price paid by buyers in a market will decrease if the government

Accepted Answer

A) imposes a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) decreases a binding price floor in that market. 
A) imposes a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) decreases a binding price floor in that market.

Question 9

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

Accepted Answer

A) unemployment compensation. 
B) the salaries of members of Congress. 
C) Social Security and Medicare. 
D) housing subsidies for low-income people. 
A) unemployment compensation. 
B) the salaries of members of Congress. 
C) Social Security and Medicare. 
D) housing subsidies for low-income people.

Question 10

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 11

As a rationing mechanism, discrimination according to seller bias is

Accepted Answer

A) efficient and fair. 
B) efficient, but potentially unfair. 
C) inefficient, but fair. 
D) inefficient and potentially unfair. 
A) efficient and fair. 
B) efficient, but potentially unfair. 
C) inefficient, but fair. 
D) inefficient and potentially unfair.

Question 12

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 commuted 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 commuted long distances.

Question 13

When government imposes a price ceiling or a price floor on a market,

Accepted Answer

A) price no longer serves as a rationing device. 
B) efficiency in the market is enhanced. 
C) shortages and surpluses are eliminated. 
D) both buyers and sellers become better off. 
A) price no longer serves as a rationing device. 
B) efficiency in the market is enhanced. 
C) shortages and surpluses are eliminated. 
D) both buyers and sellers become better off.

Question 14

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-27  
-Refer to Figure 6-27. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 16

The minimum wage has its greatest impact on the market for teenage labor.

Accepted Answer

A) True 
 B)False

Question 17

The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

Accepted Answer

A) True 
 B)False

Question 18

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A) floor. 
B) subsidy. 
C) support. 
D) ceiling. 
A) floor. 
B) subsidy. 
C) support. 
D) ceiling.

Question 19

The price paid by buyers in a market will decrease if the government

Accepted Answer

A) increases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) All of the above are correct. 
A) increases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) All of the above are correct.

Question 20

Figure 6-21  
-Refer to Figure 6-21. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A) $1. 
B) $2. 
C) $5. 
D) $6. 
A) $1. 
B) $2. 
C) $5. 
D) $6.

Exam 6: Supply, Demand, and Government Policies

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

Which of the following is correct?

If a price ceiling is not binding, then

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

The price paid by buyers in a market will decrease if the government

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

As a rationing mechanism, discrimination according to seller bias is

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

When government imposes a price ceiling or a price floor on a market,

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the seller bears $2 of the tax burden.

The minimum wage has its greatest impact on the market for teenage labor.

The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

A legal maximum on the price at which a good can be sold is called a price

The price paid by buyers in a market will decrease if the government

Figure 6-21 -Refer to Figure 6-21. The equilibrium price in the market before 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 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

Filters