Question 1

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Question 2

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-5  
-Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A) binding and creates a shortage of 40 units of the good. 
B) binding and creates a surplus of 50 units of the good. 
C) binding and creates a surplus of 90 units of the good. 
D) not binding but creates a surplus of 40 units of the good. 
A) binding and creates a shortage of 40 units of the good. 
B) binding and creates a surplus of 50 units of the good. 
C) binding and creates a surplus of 90 units of the good. 
D) not binding but creates a surplus of 40 units of the good.

Question 4

If a tax is levied on the sellers of a product, then there will be a(n)

Accepted Answer

A) downward shift of the demand curve. 
B) upward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve. 
A) downward shift of the demand curve. 
B) upward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve.

Question 5

After a binding price floor becomes effective, a

Accepted Answer

A) smaller quantity of the good is bought and sold. 
B) a larger quantity of the good is demanded. 
C) a smaller quantity of the good is supplied. 
D) All of the above are correct. 
A) smaller quantity of the good is bought and sold. 
B) a larger quantity of the good is demanded. 
C) a smaller quantity of the good is supplied. 
D) All of the above are correct.

Question 6

Figure 6-7  
-Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A) any price below $6. 
B) a price between $3 and $6. 
C) a price between $6 and $9. 
D) any price above $6. 
A) any price below $6. 
B) a price between $3 and $6. 
C) a price between $6 and $9. 
D) any price above $6.

Question 7

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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

Question 9

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A) supply of gasoline to decrease. 
B) quantity of gasoline demanded to decrease. 
C) equilibrium price of gasoline to increase. 
D) All of the above are correct. 
A) supply of gasoline to decrease. 
B) quantity of gasoline demanded to decrease. 
C) equilibrium price of gasoline to increase. 
D) All of the above are correct.

Question 10

If a tax is levied on the buyers of a product, then there will be a(n)

Accepted Answer

A) upward shift of the demand curve. 
B) downward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve. 
A) upward shift of the demand curve. 
B) downward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve.

Question 11

Figure 6-12  
-Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is

Accepted Answer

A) less than Q3. 
B) Q3. 
C) between Q1 and Q3. 
D) at least Q1. 
A) less than Q3. 
B) Q3. 
C) between Q1 and Q3. 
D) at least Q1.

Question 12

The goal of rent control is to

Accepted Answer

A) facilitate controlled economic experiments in urban areas. 
B) help landlords by assuring them a low vacancy rate for their apartments. 
C) help the poor by assuring them an adequate supply of apartments. 
D) help the poor by making housing more affordable. 
A) facilitate controlled economic experiments in urban areas. 
B) help landlords by assuring them a low vacancy rate for their apartments. 
C) help the poor by assuring them an adequate supply of apartments. 
D) help the poor by making housing more affordable.

Question 13

Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A) Cellular phones become more popular. 
B) Traditional land line phones become more expensive. 
C) The components used to produce cellular phones become more expensive. 
D) A technological advance makes cellular phone production less expensive. 
A) Cellular phones become more popular. 
B) Traditional land line phones become more expensive. 
C) The components used to produce cellular phones become more expensive. 
D) A technological advance makes cellular phone production less expensive.

Question 14

Table 6-1
 $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Sugplied }
\end{array} \
\hline \$ [ 12 & 12 & 0 \
\hline \$ 1 & 10 & 2 \
\hline \$ 2 & 8 & 4 \
\hline \$ 3 & 6 & 6 \
\hline \$ 4 & 4 & 8 \
\hline \$ 5 & 2 & 10 \
\hline \$ 6 & 0 & 12 \
\hline
\end{array}$$
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market?

Accepted Answer

A) 0 units 
B) 2 units 
C) 8 units 
D) 10 units 
A) 0 units 
B) 2 units 
C) 8 units 
D) 10 units

Question 15

Figure 6-18  
-Refer to Figure 6-18. The price paid by buyers after the tax is imposed is

Accepted Answer

A) $2.50. 
B) $3.50. 
C) $5.00. 
D) $6.00. 
A) $2.50. 
B) $3.50. 
C) $5.00. 
D) $6.00.

Question 16

A binding minimum wage creates unemployment.

Accepted Answer

A) True 
 B)False

Question 17

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 18

A tax imposed on the sellers of a good will raise the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Question 19

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Accepted Answer

A) not change, and the price received by sellers will not change. 
B) not change, and the price received by sellers will decrease. 
C) decrease, and the price received by sellers will not change. 
D) decrease, and the price received by sellers will decrease. 
A) not change, and the price received by sellers will not change. 
B) not change, and the price received by sellers will decrease. 
C) decrease, and the price received by sellers will not change. 
D) decrease, and the price received by sellers will decrease.

Question 20

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers. 
A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers.

Exam 6: Supply, Demand, and Government Policies

Workers with high skills and much experience are not typically affected by the minimum wage.

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

If a tax is levied on the sellers of a product, then there will be a(n)

After a binding price floor becomes effective, a

Figure 6-7 -Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

A price floor set above the equilibrium price is not binding.

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

When OPEC raised the price of crude oil in the 1970s, it caused the

If a tax is levied on the buyers of a product, then there will be a(n)

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is

The goal of rent control is to

Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Table 6-1 Price Quantity Denanded Quantity Sugplied \ [12 12 0 \ 1 10 2 \ 2 8 4 \ 3 6 6 \ 4 4 8 \ 5 2 10 \ 6 0 12 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market?

Figure 6-18 -Refer to Figure 6-18. The price paid by buyers after the tax is imposed is

A binding minimum wage creates unemployment.

Buyers and sellers rarely share the burden of a tax equally.

A tax imposed on the sellers of a good will raise the

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

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

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S₁ to S₂, the resulting quantity of gasoline that is bought and sold is