Question 1

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A) encourages teenagers to drop out of school. 
B) prevents some workers from getting needed on-the-job training. 
C) contributes to the problem of unemployment. 
D) All of the above are correct. 
A) encourages teenagers to drop out of school. 
B) prevents some workers from getting needed on-the-job training. 
C) contributes to the problem of unemployment. 
D) All of the above are correct.

Question 2

Rent control

Accepted Answer

A) is an example of a price ceiling. 
B) leads to a larger shortage of apartments in the long run than in the short run. 
C) leads to lower rents and, in the long run, to lower-quality housing. 
D) All of the above are correct. 
A) is an example of a price ceiling. 
B) leads to a larger shortage of apartments in the long run than in the short run. 
C) leads to lower rents and, in the long run, to lower-quality housing. 
D) All of the above are correct.

Question 3

A tax imposed on the buyers 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 4

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

@#IMG-DLM& Those who are helped by the minimum wag

Question 5

Rent control policies tend to cause

Accepted Answer

A) relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run. 
B) relatively larger shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run. 
C) relatively larger shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run. 
D) relatively smaller shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run. 
A) relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run. 
B) relatively larger shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run. 
C) relatively larger shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run. 
D) relatively smaller shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.

Question 6

The quantity sold in a market will increase if the government

Accepted Answer

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

Question 7

Figure 6-20  
-Refer to Figure 6-20. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A) $16 
B) $18 
C) $24 
D) $26 
A) $16 
B) $18 
C) $24 
D) $26

Question 8

Figure 6-16  
-Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14 
A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14

Question 9

If a binding price ceiling is imposed on the baby formula market, then

Accepted Answer

A) the quantity of baby formula demanded will increase. 
B) the quantity of baby formula supplied will decrease. 
C) a shortage of baby formula will develop. 
D) All of the above are correct. 
A) the quantity of baby formula demanded will increase. 
B) the quantity of baby formula supplied will decrease. 
C) a shortage of baby formula will develop. 
D) All of the above are correct.

Question 10

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 floor of $1 on this market. What will be the size of the surplus 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 11

Figure 6-7  
-Refer to Figure 6-7. Suppose a price floor of $7 is imposed on this market. As a result,

Accepted Answer

A) buyers' total expenditure on the good decreases by $20. 
B) the supply curve shifts to the left so as to now pass through the point (quantity = 40, price = $7). 
C) the quantity of the good demanded decreases by 20 units. 
D) the price of the good continues to serve as the rationing mechanism. 
A) buyers' total expenditure on the good decreases by $20. 
B) the supply curve shifts to the left so as to now pass through the point (quantity = 40, price = $7). 
C) the quantity of the good demanded decreases by 20 units. 
D) the price of the good continues to serve as the rationing mechanism.

Question 12

A binding price floor (i)
Causes a surplus.(ii)
Causes a shortage.(iii)
Is set at a price above the equilibrium price.(iv)
Is set at a price below the equilibrium price.

Accepted Answer

A) (i) only 
B) (iii) only 
C) (i) and (iii) only 
D) (ii) and (iv) only 
A) (i) only 
B) (iii) only 
C) (i) and (iii) only 
D) (ii) and (iv) only

Question 13

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A) Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B) The number of farmers selling soybeans decreases. 
C) Consumers' income increases, and soybeans are a normal good. 
D) The number of consumers buying soybeans increases. 
A) Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B) The number of farmers selling soybeans decreases. 
C) Consumers' income increases, and soybeans are a normal good. 
D) The number of consumers buying soybeans increases.

Question 14

Figure 6-7  
-Refer to Figure 6-7. For a price floor 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 15

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 16

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-16  
-Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible. 
A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible.

Question 18

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A) upward by exactly $2.00. 
B) upward by less than $2.00. 
C) downward by exactly $2.00. 
D) downward by less than $2.00. 
A) upward by exactly $2.00. 
B) upward by less than $2.00. 
C) downward by exactly $2.00. 
D) downward by less than $2.00.

Question 19

Figure 6-9  
-Refer to Figure 6-9. At which price would a price floor be binding?

Accepted Answer

A) $6 
B) $5 
C) $4 
D) $3 
A) $6 
B) $5 
C) $4 
D) $3

Question 20

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Accepted Answer

A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus. 
A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus.

Exam 6: Supply, Demand, and Government Policies

Opponents of the minimum wage point out that the minimum wage

Rent control

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

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Rent control policies tend to cause

The quantity sold in a market will increase if the government

Figure 6-20 -Refer to Figure 6-20. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Figure 6-16 -Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

If a binding price ceiling is imposed on the baby formula market, then

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 floor of $1 on this market. What will be the size of the surplus in this market?

Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $7 is imposed on this market. As a result,

A binding price floor (i) Causes a surplus.(ii) Causes a shortage.(iii) Is set at a price above the equilibrium price.(iv) Is set at a price below the equilibrium price.

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

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

A price ceiling set below the equilibrium price is nonbinding.

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Figure 6-16 -Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be binding?

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

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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