Question 1

As rationing mechanisms, prices

Accepted Answer

A) and long lines are efficient. 
B) are efficient, but long lines are inefficient. 
C) are inefficient, but long lines are efficient. 
D) and long lines are inefficient. 
A) and long lines are efficient. 
B) are efficient, but long lines are inefficient. 
C) are inefficient, but long lines are efficient. 
D) and long lines are inefficient.

Question 2

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 3

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 4

A price floor 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 5

Figure 6-18  
-Refer to Figure 6-18. How much tax revenue does this tax generate for the government?

Accepted Answer

A) $75 
B) $125 
C) $175 
D) $300 
A) $75 
B) $125 
C) $175 
D) $300

Question 6

Price controls are usually enacted

Accepted Answer

A) as a means of raising revenue for public purposes. 
B) when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C) when policymakers detect inefficiencies in a market. 
D) All of the above are correct. 
A) as a means of raising revenue for public purposes. 
B) when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C) when policymakers detect inefficiencies in a market. 
D) All of the above are correct.

Question 7

A price floor is

Accepted Answer

A) a legal minimum on the price at which a good can be sold. 
B) often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. 
C) a source of inefficiency in a market. 
D) All of the above are correct. 
A) a legal minimum on the price at which a good can be sold. 
B) often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. 
C) a source of inefficiency in a market. 
D) All of the above are correct.

Question 8

Suppose that in a particular market, the supply curve is highly elastic and the demand 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 9

Figure 6-24
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-24. The buyers will bear a higher share of the tax burden than sellers if the demand is

Accepted Answer

A) D1, and the supply is S1. 
B) D2, and the supply is S1. 
C) D1, and the supply is S2. 
D) D2, and the supply is S2. 
A) D1, and the supply is S1. 
B) D2, and the supply is S1. 
C) D1, and the supply is S2. 
D) D2, and the supply is S2.

Question 10

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Accepted Answer

A) True 
 B)False

Question 11

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 12

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 13

The price received by sellers in a market will increase if the government decreases a

Accepted Answer

A) binding price floor in that market. 
B) binding price ceiling in that market. 
C) tax on the good sold in that market. 
D) None of the above is correct. 
A) binding price floor in that market. 
B) binding price ceiling in that market. 
C) tax on the good sold in that market. 
D) None of the above is correct.

Question 14

In the short run, rent control causes the quantity supplied

Accepted Answer

A) and quantity demanded to fall. 
B) to fall and quantity demanded to rise. 
C) to rise and quantity demanded to fall. 
D) and quantity demanded to rise. 
A) and quantity demanded to fall. 
B) to fall and quantity demanded to rise. 
C) to rise and quantity demanded to fall. 
D) and quantity demanded to rise.

Question 15

Figure 6-8  
-Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is

Accepted Answer

A) a price ceiling of $2.00. 
B) a price ceiling of $5.00. 
C) a price floor of $5.00. 
D) either a price ceiling of $2.00 or a price floor of $5.00. 
A) a price ceiling of $2.00. 
B) a price ceiling of $5.00. 
C) a price floor of $5.00. 
D) either a price ceiling of $2.00 or a price floor of $5.00.

Question 16

Figure 6-8  
-Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Accepted Answer

A) no surplus of the good. 
B) a surplus of 20 units of the good. 
C) a surplus of 30 units of the good. 
D) a surplus of 55 units of the good. 
A) no surplus of the good. 
B) a surplus of 20 units of the good. 
C) a surplus of 30 units of the good. 
D) a surplus of 55 units of the good.

Question 17

If a tax is levied on the sellers of flour, then

Accepted Answer

A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax. 
A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 20

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

As rationing mechanisms, prices

When a tax is imposed on a good, the result is always a shortage of the good.

The United States is the only country in the world with minimum-wage laws.

A price floor is binding when it is set

Figure 6-18 -Refer to Figure 6-18. How much tax revenue does this tax generate for the government?

Price controls are usually enacted

A price floor is

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

Figure 6-24 Suppose the government imposes a $2 on this market. -Refer to Figure 6-24. The buyers will bear a higher share of the tax burden than sellers if the demand is

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Price is the rationing mechanism in a free, competitive market.

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

The price received by sellers in a market will increase if the government decreases a

In the short run, rent control causes the quantity supplied

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

If a tax is levied on the sellers of flour, then

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

Minimum-wage laws dictate the lowest wage that firms may pay workers.

A tax on buyers shifts the demand curve to the right.

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